The US trade deficit widened in December, pushing the shortfall for 2005 to record levels. In ecember, the deficit was $65.7bn (£37bn) compared with $64.7bn in November. The 2005 deficit was $725.8bn, almost 18% more than in 2004. While exports have climbed, they have struggled to keep up as record oil prices, strong consumer demand and cheap foreign goods boosted imports.
Analysts have questioned how long this size of deficit can be sustained.

'Extra room'

"There have been historical precedents where people have spent well in excess of what they've earned from foreign trading partners for extended periods of time and nothing has happened," said Drew Matus of Lehman Brothers. He added that the US's situation was eased by the fact that the dollar remains the global benchmark and reserve currency. But he warned: "How much extra room does that give you? "That's the $100,000 question, or the $100m question, or the $1 trillion question." In December, exports rose by 2.1% to $111.5bn, as imports increased by 1.9% to $177.2bn. The trade gap with China jumped by 25% to a record $201.6bn.


Source: BBC