Foreign Trade Gap Hits Record $43.4 Billion

The deficit in the broadest measure of U.S. foreign trade widened to a record $43.4 billion from July through September as for the first time in 29 years foreign earnings in this country topped American earnings abroad, the government reported today.

The Commerce Department said the imbalance in the nation’s current account rose 5.3% from the $41.2 billion imbalance recorded from April through June, which had been the previous record, and pushing the country deeper into hock as the world’s largest debtor nation.

The current account is considered the most important trade figure because it measures not only trade in merchandise but also trade in services, primarily investment flow between countries.

In a sign of how the country’s international fortunes have dwindled, the government reported that the country paid out more to foreigners on their U.S. holdings than Americans earned on their overseas investments. While it was only a small imbalance of $600 million, it marked the first time that American investments had failed to be in surplus in 29 years.

Worsening Trend Seen

Analysts said this trend will worsen in succeeding quarters as the United States has to pay more and more to service the growing tide of foreign investments in this country.

While the United States has run a deficit in merchandise trade for 15 of the last 16 years, the current account showed a surplus as recently as 1981 as Americans’ earnings on overseas investments were enough to offset the merchandise deficits.

But a flood of foreign goods has wiped out the cushion once provided by investment earnings. This situation has made the United States the world’s largest debtor country as Americans have handed over billions of dollars to foreigners in exchange for imported goods.