U.S. trade deficit hit $489B in 2003

By Jonathan Weisman and Paul Blustein
Washington Post

WASHINGTON — The U.S. trade deficit hit a record $489 billion in 2003, the Commerce Department said yesterday, adding fresh fuel to a political fight over the loss of jobs to international competition.

The gap was widened by Americans' endlessly expanding appetite for foreign autos, consumer electronics, clothing and furniture. Although exports grew 4.5 percent last year, to $1.018 trillion, imports rose 8.3 percent, to $1.507 trillion. In December, the deficit rose by 11 percent from November.

"At the end of the day, the trade deficit reflects the fact that Americans are better shoppers in the world economy than other people," said Neal Soss, chief economist at Credit Suisse First Boston. "We buy more from ourselves and from other countries, while people in other countries don't buy as much from themselves or from us."

But while the trade report underscored the robust growth in U.S. consumption, it also provided a stark reminder of the the lack of employment growth, which is attributable in part to the loss of jobs to foreign competition. Controversy over that issue was stoked Monday when President Bush's top economist said the migration of service jobs overseas "is just a new way of doing international trade." On Wednesday, N. Gregory Mankiw said he had been "misinterpreted."

The emergence of such "outsourcing" as a potent political issue has been swift. Democrats on Thursday introduced what they called the Jobs for America Act, which would require companies moving jobs overseas to give employees three months notice and to disclose how many jobs would be affected, where they are going and why. Then yesterday, the White House Office of Management and Budget announced an initiative to roll back regulations that the administration says have raised the manufacturing costs.

The reaction has stemmed from growing sentiment that U.S. workers are losing ground to low-cost competitors, especially in China and India. The University of Michigan reported yesterday an unexpectedly large drop in consumer sentiment, in part because of concerns over slow job growth and positions migrating abroad.