Trade Deficit a Record $21.3 Billion

America’s trade deficit swelled to another record in May as oil prices surged, Americans snapped up imported autos and demand for U.S. exports shrank, reflecting the lingering effects of a global financial crisis.

The Commerce Department reported Tuesday that the trade deficit ballooned to $21.3 billion--a 14.8% increase from April’s $18.6-billion deficit.

Imports of goods and services climbed 2.2% to a record high of $98.9 billion in May. That reflected an advance in the price of imported oil, to the highest level since late 1997, and a big jump in auto shipments.

At the same time, U.S. exports fell 0.8% to $77.6 billion as demand dropped sharply for commercial aircraft, farm products and American-made autos.

So far this year, the U.S. trade deficit is running at an annual rate of $225 billion, well above last year’s record high $164.3 billion.

“We have a red-hot economy in terms of growth, and that strong demand in our economy is spilling over into higher imports,” said David Jones, an economist with Aubrey G. Lanston & Co. “Even though some countries have begun to recover from the economic crisis, that recovery is not yet showing up in higher demand for U.S. exports.”

Prices of imported crude oil, which for most of last year were falling as global demand shrank, rebounded in recent months, sending America’s oil bill sharply higher. In May, the price of crude jumped to $14.54 a barrel, up from $12.71 in April and the highest price since December 1997. Although the volume of oil imports dropped in May, the rising price per barrel pushed America’s foreign oil bill up 12.8% to $5.3 billion.

Imported autos and auto parts were up 6% in May to $14.5 billion.

The drop in U.S. exports included a decline of $221 million in sales of commercial aircraft, a drop of $283 million in sales of consumer goods and a fall of $129 million in sales of U.S. autos. Farm sales fell by $29 million, with exports of meat, rice and corn all down.

The U.S. deficit with Mexico climbed to $2.2 billion in May, the second-highest level on record, and the deficit with China jumped 9.7% in May to $5.3 billion.

The U.S. deficit with Japan, however, shrank by 6.7% in May to $5.3 billion, but for the first five months of this year it is still running 6.5% above the 1998 levels.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Trade Deficit

Overall deficit in goods and services, in billions:

May 1999: $21.34 billion

Source: Commerce Department