Foreign Trade Deficit Hits Record : Broadest Gauge Shows U.S. $140 Billion in the Red in ’86

America’s deficit in the broadest measure of foreign trade soared to a record $140.57 billion in 1986, pushing the United States further into the red as the world’s largest debtor nation, the government reported Tuesday.

The imbalance in the nation’s current account jumped 19.5% above the previous record of $117.68 billion, set in 1985. Last year ended on an especially gloomy note as the quarterly deficit from October through December hit a record as well, $36.84 billion, primarily due to a further deterioration in merchandise trade.

The current account measures not only trade in merchandise but also in services, which includes such items as investment earnings, tourism and foreign aid.

While the United States has run a deficit in merchandise trade for 15 of the past 16 years, the current account was in surplus as recently as 1981 as Americans’ earnings on overseas investments were enough to offset the merchandise deficits. But in recent years, a flood of foreign goods has wiped out the cushion once provided by investment earnings.

Deficits in the current account have made the United States the world’s largest debtor country as foreigners now own more in U.S. investments than Americans hold in foreign investments.

Second Year in a Row

America became a debtor nation in 1985 for the first time since 1914 with a total figure owed to the rest of the world of $107.44 billion. The new figures on the current account for 1986 indicate that the U.S. debt has now soared to more than $220 billion, putting America far ahead of the previous debt leader, Brazil, which owes $108 billion to foreigners.

The $36.84-billion current account deficit for the final three months of 1986 was 4.4% higher than the previous record set in the July-September quarter of $35.30 billion.

Most of the deterioration was accounted for by a higher merchandise deficit, which climbed to $38.37 billion in the final three months of the year, up 3.3% from the third quarter. This report, which omits such factors as military sales and the cost of shipping, confirms parallel figures issued on a monthly basis.

Adding to the current account deficit in the fourth quarter was $3.95 billion in transfer payments, including foreign aid. This was offset somewhat by $5.48 billion in net earnings on foreign investments by Americans.

Some analysts say the 1986 current account deficit may represent the low point for America’s trade problems, with the prospect of a slight improvement this year.