Trade Deficit Narrows as Oil and Chinese Imports Drop

By JACK HEALY
The New York Times
Published: Jan 14, 2009

Skidding oil prices helped push the United States trade deficit to its lowest point in five years in November, as the country imported less goods amid a sharp economic slowdown.

The gap between the value of imports and exports narrowed to $40.4 billion in November, from $56.7 billion a month earlier, the Commerce Department reported on Tuesday. That marked a 28.7 percent decline in one month.

The trade deficit shrank as American consumers clipped their demand for foreign-made consumer goods, and tumbling energy prices slashed the value of imported oil and gas. Petroleum imports dropped 36.5 percent to $23.6 billion.

Even excluding energy prices, the so-called core trade deficit narrowed in November.

Although American exports fell by $8.7 billion between October and November, the losses were marginal compared with the 12 percent, or $25 billion, drop in imports. The United States exported a total of $142.8 billion in goods and services in November and imported $183.2 billion.

“It’s still a pretty sizeable trade deficit, but it’s going in the right direction,” said Julia Coronado, senior United States economist at Barclay’s Capital. “Unfortunately, it comes with a lot of pain.”

The imbalance with China dropped 17.5 percent to $23.1 billion in November, which was the smallest deficit since June. The decline was fairly broad, including toys, clothing and electronics.

The trade deficit through November is at annual rate of $688.2 billion, down from $700.3 billion a year ago.

Overall, trade between the United States and the rest of the world has plunged since the summer as the financial crisis ravaged global markets, deepening the economic downturn.

“Trade flows have been crushed by the credit crunch, which has reduced demand for traded goods and services and made it more difficult for ex- porters and imports to obtain trade finance,” Ian Shepherdson, chief United States economist of High Frequency Economics, wrote in a note.

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