WASHINGTON -- The US trade deficit fell to the lowest level in nearly six years in December as the recession depressed demand for imports. The trade deficit in 2008 fell for a second straight year and economists expect an even bigger decline this year.
A forklift positions shipping containers as cargo ships are unload at the Port of Miami in Miami, Florida. The US trade deficit fell to the lowest level in nearly six years in December as the recession depressed demand for imports. [Agencies]
The Commerce Department said Wednesday that the deficit in December fell 4 percent to $39.9 billion, from $41.6 billion in November. It was slightly higher than the $36 billion deficit economists expected.
For the year, the deficit shrank by 3.3 percent to $677.1 billion. It was the second straight annual decline after five straight years of record deficits.
The 2008 imbalance was the lowest annual total since 2004, and many economists believe the deficit for 2009 will be half the size of last year's gap. However, the improvement is due to a painful recession that is cutting demand for imports of oil, autos and other foreign-made products.
During the presidential campaign, Obama pledged to do a better job than Republicans at protecting American workers from unfair trade practices. There are concerns the US recession and downturns in many other countries could lead to rising protectionism worldwide that will make the global recession worse.
The back-to-back annual declines in the US trade deficit were the first time that has occurred since it fell for four straight years in the late 1980s and early 1990s.
The $39.9 billion December imbalance was the smallest deficit since the gap totaled $39.7 billion in February 2003.
Exports of US goods and services in December dropped 6 percent to $133.8 billion, the fifth straight monthly decline. Sales of farm products, domestic cars, medical equipment and computers all fell.
Exports of commercial aircraft rose in December, reflecting a rebound after the end of a strike at Boeing Co. But economists believe exports will continue to fall in coming months as the recession that began in the US spreads to more countries, crimping demand for American products.
Imports dropped 5.5 percent in December to $173.7 billion. Imports of petroleum products fell 6.7 percent to $22.3 billion, the lowest level in 22 months, as the average price of an imported barrel of crude oil dropped to $49.93, the lowest point since December 2005.
Imports of autos and auto parts dropped to $14.9 billion, the lowest level since May 1999.
The deficit with Canada dropped 17.6 percent to $2.8 billion in December, the lowest level since June 1999. The imbalance with the European Union rose by 24.5 percent to $7 billion, and the imbalance with Mexico was up 16.1 percent to $4.1 billion.