f U.S. companies are so competitive in global markets, why is the United States running such a large trade deficit? The Federal Reserve's decision to raise interest rates last week was based at least in part on concerns that U.S. demand for foreign goods is inflating the current-account deficit, New York Fed President William McDonough says.

The current account is the net value of a nation's exports of goods and services, plus or minus all unilateral monetary transfers abroad, such as remittances, pensions and grants-in-aid.McDonough's comments were the first from a top Fed official indicating that nervousness about the widening trade gap figured into the Fed's decision earlier this month to raise two key rates by a quarter percentage point.

''A somewhat firmer monetary policy no doubt has some beneficial effects in bringing better order to our foreign accounts,'' McDonough told a Foundation for Student Communication conference.

The trade gap is the one major imbalance that could signal the end of the longest peacetime expansion in U.S. history. As McDonough pointed out, domestic demand has been running in excess of supply, and that gap is being filled by ''importing savings'' from other countries. America's low savings rate requires borrowing from abroad.

Uncle Sam, the ultimate consumer, apparently believes that as long as he can pay the minimum due on his credit cards each month, he doesn't have to worry about the big balances outstanding.

The danger is clear. If investors increasingly view the U.S. deficit and foreign debt buildup as unsustainable, U.S. assets could become less attractive and the dollar could weaken, boosting import prices and capital costs and perhaps undermining the U.S. stock market.

''The very large current-account deficit that we have now . . . is not a good idea. At some stage, foreign holders of American assets - be they bonds, stocks or foreign direct investment - are going to think that they have had quite enough,'' McDonough said.

''That combination of things is what led us to the conclusion that the rates should be increased.''

How long the United States can manage such big deficits and the foreign debt that results is almost anyone's guess. But the international system cannot sustain indefinitely large trade imbalances.

So far this year, America's trade deficit is running at an annual rate of $256 billion, far ahead of last year's record imbalance of $164.3 billion. Imports have been at record levels all year, reflecting a huge rise in America's foreign oil bill, as well as ample imports of autos and consumer goods.

According to World Trade Organization economists, U.S. imports in the first eight months of this year increased by 10 percent in value terms. U.S. exports, however, expanded by only 0.3 percent in the same period.

A WTO report said the widening in the U.S. current account has led to protectionist pressures ''from some sectors, aimed at persuading the government to implement trade remedy measures to curb imports of some products from specific countries.''

It seems unfair, however, to accuse the United States of being protectionist. Imports have been growing steadily as a percentage of gross domestic product. They represented about 10 percent of the U.S. economy in 1991, but have been growing rapidly since and are now at 18 percent of the economy.

When the trade gap worsened during the global financial crisis in 1998, that was seen as a reflection of the relative health of the U.S. economy. The United States did its part to pull the rest of the world out of recession. The U.S. dollar was strong. Capital flowed into U.S. markets.

With synchronous expansion of the world's major economies, inflation has once again become the main concern of central bankers. And well it should be. Oil prices have soared to a nine-year high, and prices of other commodities are rising. The Journal of Commerce Industrial Materials Price Index, a leading indicator of inflation, is increasing at a 7.5 percent annual rate.

Tight labor markets, higher commodity prices, and the threat of a falling dollar are all reasons why the Fed must stand vigilant against inflation.

True, the huge trade deficit is largely the result of strong U.S. economic growth relative to the rest of the world. Maybe the deficit will narrow as foreign economies recover and start buying more U.S. goods.

Now is the time for the United States to mount a major export drive. If we can't narrow the gap now, when?