$30.5-Billion Trade Deficit Nears Record : Up 9.9% From Spring Quarter; Construction of Housing Plummets

The nation’s broadest measure of foreign trade surged to a near-record deficit of $30.5 billion during the July-September quarter, pushing the country farther into the status as a debtor nation, the Commerce Department reported today.

The deficit in the current account, also known as the country’s balance of payments, was 9.9% higher than the $27.7 billion in the April-June quarter. It was the largest quarterly total since a record $31.8 billion in the final three months of 1984.

The current account measures not only trade in merchandise but also in services, mainly investment earnings.

The Commerce Department also reported today that housing construction fell 12.2% in November, for the steepest decline in six months.

Weakness Puzzling

With mortgage rates at their lowest levels in six years, analysts have been puzzled by the weakness in housing activity.

The latest decline left construction at an annual rate of 1.55 million units last month, the lowest pace since April of 1983. The month-to-month decline was the sharpest since a 13% drop in March.

Housing starts had risen 9% in October following a 7.1% September decline.

All regions of the country suffered a decline in building activity. The biggest drop, 31.25%, came in the Northeast, a region which for most of the year has enjoyed a sharp rebound as the area’s economic fortunes revived.

Housing starts fell 16.2% in the Midwest and 1.8% in the West. The South had a 9.3% decline.

Surplus Wiped Out

The trade deficits for the first nine months of this year total $82.4 billion. Since the country began the year with only a $28.2-billion investment surplus abroad, this surplus has been more than wiped out, putting the country into the category of a net debtor for the first time in 71 years.

The current account deficit for the third quarter included an increase in the merchandise trade deficit to a record $33.1 billion. Imports increased $3.2 billion from the second quarter level while exports were declining by $1.3 billion.

The jump in imports to a new level of $85.5 billion came despite the fact that imports of petroleum products fell slightly. The drop in exports to $52.3 billion, the lowest level in two years, came as both agricultural and non-agricultural exports dropped.