Treasury: Deficit Hits New Record in Just 3 Months

The deficit of $485.2 billion through December is more than four times the $108.8 billion in red ink recorded during the year-ago period.

Graphic charts the monthly changes in U.S. imports, exports and trade deficit; 1 c x 3 in; 46.5 mm x 76.2 mm

(AP)

Meanwhile, the $40.4 billion trade deficit in November was the smallest monthly gap since November 2003. If left the trade deficit for the year running at an annual rate of $688.2 billion, down slightly from last year's $700.3 billion, which had marked the first drop after five consecutive years of record imbalances.

Analysts are predicting the trade deficit for all of 2009 will be less than half of this year's imbalance, reflecting the U.S. recession, which has cut import demand for merchandise and energy products, and helped to dampen oil prices after they hit a record high of $147 per barrel last July.

For November, imports fell by 12 percent to $183.2 billion, the lowest level in 2 1/2 years. The huge decline was led by the largest-ever drop in crude oil, reflecting a record fall in the average price of a barrel of crude. Total petroleum imports were down 36.5 percent to $23.6 billion.

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American manufacturers are facing not only slumping demand at home but also around the world as the global economy falls into recession.

Alcoa Inc., the world's third largest aluminum company, reported late Monday that it lost $1.19 billion during the fourth quarter of last year as demand for aluminum plunged. Pittsburgh-based Alcoa last week announced plans to lay off about 13 percent of its global work force by the end of this year.

For November, exports of goods and services dropped by 5.9 percent to $142.8 billion, the smallest level in 14 months. This reflected big declines in sales of American farm products, autos and heavy machinery.

Aircraft manufacturer Boeing Co. announced last week that it planned to cut about 3 percent of its work force as the weakening global economy has cut into demand for new orders for jetliners, and Caterpillar Inc. said last month that it planned to cut executive pay by up to 50 percent in 2009 because of weakening global demand.