AFTER years of being told by Asians and Europeans that it had to find a way to reduce its trade deficit, the United States did find a way in 2009. A global recession did the trick, producing the largest decline ever in the deficit.
The recession caused American imports to fall by 26 percent, by far the largest annual drop in imports of goods since the government began keeping trade statistics in 1948. There have been only a few years with any declines at all, with the largest before 2009 being a fall of nearly 7 percent in 1982, another recession year.
Exports also fell, but not by as much, as can be seen in the accompanying charts. The result was a trade deficit in goods of $501 billion, or 3.5 percent of the country’s gross domestic product. That was down from $816 billion, or 5.7 percent of gross domestic product.
Any way you slice that, it was the largest improvement in the trade deficit on record. In terms of G.D.P., the biggest improvement before 2009 was in 1988, when the deficit declined by almost 1 percent. In terms of dollars, the improvement of $315 billion was almost 10 times as big as the largest previous improvement, of nearly $35 billion, in 1988. Then, the dollar was plunging, improving the country’s trade competitiveness.
Even so, the deficit, as a percentage of G.D.P., is larger than it ever was before 1999.
Whether the trade deficit continues to decline, even if less sharply, may depend on the pace of economic recovery, both in the United States and in the rest of the world. Slower American growth would restrain imports. Faster growth in other countries would be likely to increase exports.
One reason for the sharp improvement is that this recession caused concern among far more consumers than a usual one does. Normally, those who lose their jobs, or fear they might do so, cut back. In this recession, the slump in housing prices made many people feel poorer. Some of them, who had depended on refinancing mortgages to provide cash to spend, had no choice but to reduce spending.
Historically, there has been a surge in imports when the American economy recovered from recession. But perhaps that could be different this time, if American consumers remain cautious.
“A moderate rebound for the U.S. consumer, after a deep recession, would be an unprecedented event,” said Robert Barbera, the chief economist of ITG, an investment advisory firm. “A silver lining would be a decidedly tame rebound in imports, because so much discretionary spending goes to imported goods.”
It was not, however, imports of consumer goods that plunged the most in 2009. They were down 11 percent, to $428 billion. Far more important was the decline in imports of industrial goods, which fell 41 percent, to $461 billion.
Over all, imports fell by $546 billion, to $1.56 trillion, while exports declined by $231 billion, to $1.06 trillion. The United States had 68 cents of exports for every dollar of imports. At the peak of the trade deficit, in 2005, that figure was 54 cents.
Floyd Norris comments on finance and economics on his blog at nytimes.com/norris.
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