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US foreign debt reaches highest ever

WASHINGTON -- America went deeper into debt to foreigners last year as the deficit in the broadest measure of foreign trade hit a record $804.9 billion.

The Commerce Department reported yesterday that the deficit in the current account had risen 20.4 percent from the previous record of $668.1 billion set in 2004, and analysts said it was likely to climb higher this year.

''We are hemorrhaging red ink, and we are likely to continue doing that long into the future," said Mark Zandi, chief economist at Moody's Economy.com.

The deficit for just the fourth quarter also was a record at $224.9 billion, up by 21.3 percent from the third quarter, reflecting a big increase in the country's foreign oil bill.

Economists worry that the trade deficit has grown so large that foreigners may balk at holding so much of their investments here, pushing up US interest rates and weakening the dollar.

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