As a result of the slowing economy, the U.S. Commerce Department announced this morning that the trade deficit has fallen to a six year low in December 2008. The trade deficit decreased 4 percent from $41.6 billion in November to $39.9 billion in December 2008. This latest figure is the lowest number recorded since February 2003 when the trade deficit totaled $39.7 billion.
While the latest figures show promising numbers, a look at the annual numbers give an even more dramatic picture. In 2008, the trade deficit actually fell 3.3 percent to $677.1 billion. This is the second straight year that the deficit has seen a decline. Consecutive annual declines have not been seen since the late 1980s and early 1990s where the deficit fell for four straight years.
U.S. goods and services exported in December showed a decline of 6 percent to $133.8 billion. This fifth straight month of declining numbers saw the reduction of sales in domestic vehicles, medical equipment, computers, and farm products.
Imports into the U.S. in December declined 5.5 percent to $173.7 billion. One main driver of this figure is the reduction of imported vehicles and parts to $14.9 billion, which is the lowest figure since May 1999. Another main driver of the decline in imports was the 6.7 percent fall in imported petroleum to $22.3 billion, which is the lowest number seen in 22 months.
The 2008 trade deficit is actually the lowest figure seen since 2004. Economists anticipate that the 2009 trade deficit will be about half of the previous year's number. In the past year, consumers have been taking a more conservative approach to spending and are more aware of the importance of purchasing domestic goods. Additionally, President Obama pledged during his campaign to protect American workers from unfair trade practices.