Trade Deficit Soars 57% in September to Record Mark of $15.5 Billion
The nation’s trade deficit hit an all-time high of $15.5 billion in September, an increase of 57% over August, the government reported today.
The huge increase surprised many analysts, who had been expecting a much more moderate rise.
In a separate report, government said today that its main gauge of future economic activity rose a barely perceptible 0.1% in September.
The big jump in the trade deficit, combined with the weak performance of the Index of Leading Indicators, was certain to fuel pessimism about the nation’s economic future.
Imports and Exports
The Commerce Department said the trade deficit--the difference between imports and exports--surged to $15.5 billion in September, 57% higher than the August deficit of $9.9 billion.
The big jump came from a 21.8% surge in imports, which put them at a record high of $33.3 billion. Exports posted a much lower 1.8% increase, putting them at $17.7 billion, still below the level of last March.
Some economists had been expressing moderate optimism, based on a belief that the worst of the country’s trading woes might be over with the declines this year in the value of the dollar.
However, other economists disputed this contention, saying it was too soon for the dollar’s drop to be a positive influence on the trade performance. They said the dollar would have to drop farther and stay down longer to achieve a turn-around on the deficit.
New Record Expected
The trade deficit for all of 1985 is expected to hit a record $150 billion, far surpassing last year’s record of $123.3 billion.
The huge trade deficit has been the principal factor holding back economic growth this year. The United States has lost 340,000 manufacturing jobs since January as American producers have seen markets evaporate under the onslaught of foreign competition.
The slight 0.1% rise in the leading index was sharply lower than the revised 0.9% August gain and the 0.7% July increase.
The sluggish change in the index, which is designed to forecast the future course of the economy, was in line with the modest expectations of many private economists.
Rebound Expected
The Reagan Administration, however, contends that the sharp rebound in activity that took place from July through September will continue into next year.
The leading index has gone up five months in a row after a sharp 0.5% decline in April. However, the increases for the most part have been modest.
Commerce Secretary Malcolm Baldrige said the modest rise in the leading index still pointed to continued growth in 1986.
“Key leading indicators directly related to forthcoming production are pointing upward, including the factory workweek, new orders for plant and equipment and permits for home building,” he said in a statement. “Defense orders for capital goods, which are not included in the leading index, have been rising and also will contribute to continued strong growth in defense production.”
In a third report today, the Commerce Department said that orders to U.S. factories for manufactured goods fell 0.6% in September as orders for defense equipment dropped a sharp 17.1%.
