Trade Deficit Hits Record $101.6 Billion : Figures Indicate U.S. Is Debtor Nation for First Time Since 1914

The broadest measure of U.S. foreign trade plunged to a record deficit of $101.6 billion last year, more than double the deficit suffered in 1983, the government reported today.

The trade hemorrhage has been so severe it is almost certain that sometime early this year the United States became a net debtor country for the first time in 71 years, government analysts said.

The last time the United States was a net debtor was in 1914, when Americans owed $3.7 billion more to foreigners than was owed to them.

The figures released by the Commerce Department today revealed that Americans’ net investments overseas had dwindled to $32 billion by the end of the year, down from $104 billion when 1984 started. Analysts said this cushion has almost certainly been wiped out by now, although confirmation will not come for three months.

Commerce Secretary Malcolm Baldrige said in a statement that “the United State is shifting from a net creditor to a net debtor” and predicted that the problem will worsen in coming years as foreigners earn more in interest and dividend payments on their investments.

The information on net debt is contained in the current account balance--the broadest measure of U.S. foreign trade. The current account measures not only trade in merchandise but trade in services, primarily investment flows between the United States and other countries.

While the country has run a trade deficit every year since 1975, income from Americans’ foreign investment flowing back into the country has in most years been enough to offset the merchandise deficit.