Export Surge Cited in Lower Trade Deficit
The nation’s closely watched trade deficit improved substantially in March, in part because of a near-record surge in exports, the Commerce Department reported Thursday.
The deficit shrank to $13.6 billion, down from $15.1 billion in February. Economists said the March figure indicates that the steep fall in the value of the dollar over the last 18 months is beginning to produce concrete results in the trade balance and that the strong growth in exports is an encouraging sign for the nation’s future economic performance.
Exports of U.S. goods jumped nearly 13% over February’s level, to $21.1 billion, the highest increase since March, 1981, and the second best monthly figure ever. The value of imports rose only 2.9%, to $34.7 billion.
While calling the news encouraging, economists said that recent progress toward reducing the nation’s trade imbalance probably was not dramatic enough to cool protectionist sentiment in Congress and the nation’s import-sensitive industrial regions.
So far this year, the trade deficit has been running at an annual rate of $163.8 billion, suggesting a slight improvement over 1986, when the deficit was a record $166.3 billion.
“For politicians in Washington, the improvement might be interpreted as painfully slow, but from the standpoint of economists, the trend is very encouraging,” said Byung K. Han, economist at Core-States Financial Corp., a major Philadelphia banking company.
Marlin Fitzwater, President Reagan’s spokesman, proclaimed “good news on the trade front” and noted that “the nominal trade deficit is gradually declining.”
However, some congressional Democrats were less cheered.
‘More Chilling News’
House Speaker Jim Wright (D-Tex.) said that imports are still hitting record levels and called Thursday’s report “more chilling news.”
“In spite of repeated rosy predictions and promises by the Administration of dramatic improvements in the trade balance arising from the falling dollar, the deficit for March was still $13.6 billion. That is the same level as January and February averaged out.”
Wright is correct on the 1987 numbers, analysts noted, but failed to compare them to the previous six months, when the monthly trade deficit averaged $14.8 billion.
“That’s improvement,” said Jason Benderly, co-director of economic research for the Wall Street investment house of Goldman Sachs & Co. “And one thing that makes it more impressive is that we’re paying a lot more for our oil than in the prior period.”
The export growth was led by strong sales of U.S. manufactured goods, especially office machines, aircraft, electrical equipment and processed chemicals. The nation continued to import large amounts of computer and telecommunications equipment, petroleum and industrial machinery.
Large Trading Deficits
The United States continued to run large trading deficits with Japan, Canada and Western Europe. The deficit with Japan and Canada appears to be gradually narrowing, while the shortfall with Europe--particularly West Germany--widened in March, to $2.5 billion from $1.9 billion in February.
While the dollar figures may not indicate dramatic improvement in America’s trade position, the numbers mask a substantial surge in the volume of exported U.S. goods.
“The size of the deficit (measured in dollars) is not likely to shrink much, but these numbers imply continuing improvement in the volume of trade flows,” said Bruce Steinberg, senior economist at Merrill Lynch Economics in New York. “On a volume basis, exports are much higher and that’s very important for this economy. Much of the growth we’re going to get for the rest of the year will be from a net increase in exports.”
