Currency traders believe the White House wants the dollar to decline further.
WASHINGTON (AP) -- The U.S. trade deficit hit an all-time high of $60.3 billion in November as American appetites for foreign oil and even imported food reached record levels.
The Bush administration urged other countries to help fix the problem, but analysts said the yawning deficit won't be so easily solved.
The Commerce Department reported Wednesday that the shortfall between what the United States sells abroad and what it imports increased 7.7 percent from the previous record -- the October deficit of $56 billion.
That was a surprise given that oil prices had come down during the month.
Analysts said it served to underscore the seriousness of the country's trade situation.
The deficit through November totaled $561.3 billion and is expected to top $600 billion once December's figures are tallied, far surpassing last year's record of $496.5 billion.
"We now have the Grand Canyon of trade deficits," said Joel Naroff, head of a Holland, Pa., forecasting firm. "Actually, deficit is really a misnomer. Chasm, gorge, black hole, infinitely deep well all fit the description better."
Democrats, who sought to make the widening trade and budget deficits issues in the presidential campaign, contended that the November shortfall was further evidence that President Bush's trade policies are not working. They note that the country lost 2.7 million manufacturing jobs over the past four years as companies moved production facilities to low-wage countries.
"A trade deficit of $60 billion a month is a crisis and it needs to be addressed, not ignored," said Sen. Byron Dorgan, D-N.D., who called on Bush to convene an emergency meeting of key government policy-makers.
But administration officials said foreign countries are not growing fast enough to stimulate domestic demand that would help boost U.S. exports.
Treasury Secretary John Snow told reporters in New York that finance officials from the world's seven wealthiest countries would focus on ways to promote global growth when they meet in London in early February.
Snow said the administration has not changed its policy favoring a strong dollar, but currency traders believe the administration really wants the dollar to decline further to lower the trade deficit by making U.S. exports cheaper on foreign markets and making imports more expensive for Americans.
News on the deficit sent the dollar sharply lower in trading Wednesday against major currencies including the euro and the British pound. Stocks, however, took the ballooning deficit in stride. The Dow Jones industrial average finished the day up 61.56 points at 10,617.78 as investors chose to focus instead on strong earnings news from Intel Corp.
While the dollar is down significantly against the euro over the past three years, it has declined much less against Asian currencies. China has refused administration pleas to stop linking its currency directly to the dollar, a practice that U.S. manufacturers contend has made the yuan as much as 40 percent undervalued, giving Chinese companies a huge competitive advantage.
Former Michigan Gov. John Engler, who heads the National Association of Manufacturers, said the administration needs to keep up the pressure on China not just on the currency issue but on other unfair trade practices as well.
Engler predicted that the trade deficit would peak in 2004 and decline by around $50 billion this year. But many private economists predicted the deficit will worsen this year before starting to improve in 2006.
David Wyss, chief economist at Standard & amp; Poor's in New York, said the solution to the U.S. deficit would come from faster growth overseas, a weaker dollar and higher U.S. savings rate, which he said could be accomplished in part by lowering the federal budget deficit.
U.S. exports, which had been rising for much of the year, suffered a setback in November, falling 2.3 percent to $66.5 billion, reflecting widespread declines including in sales of American farm products, which slipped by 1.7 percent to $4.7 billion.
The country is on track to record a deficit in farm goods -- once a major surplus area -- in 2004 as imports are running ahead of exports, reflecting strong consumer demand for various foreign foods.
Imports in November rose 1.3 percent to an all-time high of $155.8 billion. This increase was led by an 11.8 percent jump in petroleum products, which hit a monthly record of $19.4 billion, reflecting higher volume as the average price per barrel of crude oil edged down slightly.
With individual countries, the largest deficit, as usual, was with China, an imbalance of $16.6 billion, down slightly from October's record.
The deficits with Canada, South Korea and Russia all set records. The deficit with Japan rose to $7.3 billion, which was the highest level since October 2000, while the deficit with the 25-nation European Union rose to $10.5 billion.
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