U.S. Trade Deficit Hits $13.7 Billion in Month; 3rd-Highest Level Ever

The nation’s trade deficit worsened in November to its third-highest monthly level ever, rising almost 20% from October’s level, the Commerce Department reported Tuesday.

The $13.7-billion gap brought the 1985 deficit tallied thus far to $131.8 billion--higher than the record $122.3 billion for all of 1984. When December’s figures are added, the 1985 trade deficit is expected to reach a record $150 billion.

The increase in the deficit, which followed a significant improvement in the trade picture in October, was higher than many economists had forecast but did not appear to dampen expectations that a lower dollar would narrow the trade gap in 1986.

Jobless Figure Disputed

Although the persistently high dollar has held down inflation by making cheaper imported goods available to U.S. consumers, it also has forced the prices of U.S.-made goods higher on world markets and made it harder for domestic manufacturers to compete globally.

Organized labor has estimated that so far this decade, the trade deficit has shifted 3 million U.S. jobs to foreign countries. However, some economists dispute that figure and say the loss has been far lower.

Commerce Secretary Malcolm Baldrige said in a statement Tuesday that the lower dollar will “begin to promote export growth next year.”

He also called for the government to “continue our efforts to open foreign economies to U.S. goods, to encourage trading partners to adopt growth-promoting policies, to keep tax policies that spur investment and to update our antitrust laws to reflect the realities of worldwide competition.”

Dollar Impact Lags

Tom Lieser, an economist with Security Pacific National Bank in Los Angeles, said he remains “virtually certain we’ll see a turnaround in 1986.” The full decline in the dollar--about 24% since it peaked last February--has yet to be reflected in the trade figures, he said.

Lieser said the lower dollar has not yet curbed the deficit because many of the goods now being brought into this country were ordered months ago, when foreign-made items were more of a bargain.

Some economists, however, believe that the decline in the dollar will not be enough to choke off the flood of imports. A. Gary Shilling, who runs an economics firm in New York, earlier this week called such expectations “nonsense.”

“The rest of the world has no other outlet” for its products besides the huge U.S. market, he said, predicting that foreign manufacturers merely will trim their profit margins so that their goods can remain competitive with U.S.-made products as the dollar declines.

The higher trade deficit arose largely because of a surge in imports. U.S. exporters sold slightly more of their goods on international markets but not enough to offset growing imports.

Imports last month totaled $31.7 billion, a 9.9% increase from October. Exports rose 3.5% to $18 billion. The $13.7-billion trade deficit yielded by the two figures was 19.5% higher than October’s $11.5-billion deficit but still less than September’s monthly record of $15.5 billion and the $13.8-billion defict recorded for July, 1984.

The United States continued to run its largest trade deficit with Japan, which exported $4.6 billion more to the United States than it bought.

Lieser attributed the higher overall deficit figure in part to new procedures used by the department to measure the trade deficit. Those methods, he said, have yielded “somewhat rougher numbers” that often must be revised in future months.

Separately, the Commerce Department predicted that growth in U.S. industry will be more uniform in 1986 as the gap narrows between the fastest-growing firms and others. In a 648-page forecast of U.S. business prospects, the department projected that 80% of manufacturing companies will experience higher growth, while the dominant service industries will increase their profits.