The United States ran a record deficit of $117.7 billion in the broadest measure of international trade last year as it became one of the four largest debtor nations in the world, the Commerce Department reported yesterday.
The current-account balance, which covers trade in goods and services as well as investment flows between the United States and other countries, was dragged down by the massive merchandise trade deficit, Commerce analysts said.
This deficit reached $124.3 billion last year, an increase of almost 9 percent over 1984, completely overwhelming small surpluses in income from overseas investments and trade in services such as banking and engineering. The merchandise trade deficit reported yesterday is lower than the record $148.5 billion given in late January by the Commerce Deparment because it is figured in a different way.
The deficit increased in the fourth quarter of last year to $36.6 billion, from $29.3 billion in the previous three months, indicating a continued adverse balance of trade for this year. At the fourth-quarter rate, the current-account deficit would have reached nearly $150 billion last year. C. Fred Bergsten, director of the Institute for International Economics, predicted the current quarter's deficit would be as high as the fourth quarter's.
Last year's current-account figures show that the United States went from a country that was in the black to the rest of the world by $28.2 billion at the end of 1984, to one that became a major debtor nation for the first time since 1914. This means that foreigners now own more in U.S. investments than Americans own overseas.
The turnaround is considered extremely worrisome by some economists, even though others disagree and President Reagan has downplayed it by declaring it shows the strength of the economy.
The exact amount of the debt will not be released by the Commerce Department until June, but yesterday's figures show that it will be in the neighborhood of $56 billion. That would put this country behind Brazil and Mexico, the largest debtor nations in the Third World, each owing about $100 billion, and just ahead of Venezuela.
While these debts are potential threats to the world financial system, the U.S. debt is not considered as crucial because most of it is in dollars, which the United States can print, and because of the underlying strength of the U.S. economy.
Nonetheless, Bergsten, assistant secretary of Treasury in the Carter administration, said the U.S. debt is likely to top $100 billion by the end of this year, and will reach $400 billion before leveling off.
He called the United States' new status as a debtor nation "a massive deterioration in America's international financial position."
"We will have to pay interest on this debt, and eventually foreigners may want their money back. It essentially puts a sword out there hanging over us," said David Wyss of Data Resources Inc.
But Edward M. Bernstein, an economist at the Brookings Institution, called the overall current-account deficit a bigger problem than the fact that the United States became a debtor nation.
The United States held a current-account surplus until 1982 because investment income and a surplus in trade in services were enough to overcome merchandise trade deficits.