2nd-Quarter Trade Deficit at Record High

The deficit in the broadest measure of U.S. foreign trade swelled to a record $41.1 billion from April through June, pushing the country further into hock as the world’s largest debtor nation, the government reported today.

The Commerce Department said the imbalance in the nation’s current account rose 11.7% from the $36.8-billion deficit in the January-March quarter and was well above the previous record of $38.0 billion set in the final three months of last year.

The current account is considered the most important trade figure because it measures not only trade in merchandise but also trade in services, primarily the flow of investment funds between the United States and other countries.

The United States suffered a record $141.4-billion deficit in the current account for all of 1986. The performance during the first six months of this year indicates that the 1987 deficit will easily surpass that mark.

The government has already reported that the July-September quarter got off to a disastrous start with the trade deficit in just merchandise soaring to an all-time high of $16.5 billion in July.

Trade War Warning

Treasury Secretary James A. Baker III said Monday that the recent string of bad U.S. trade deficit reports will make it harder for the Reagan Administration to head off congressional passage of tough trade restraints. Baker warned of international trade wars if Congress passes legislation similar to that now before a House-Senate conference committee.

While the United States has run a deficit in merchandise trade for 15 of the last 16 years, the current account was in surplus as recently as 1981 as Americans’ earnings on overseas investments were enough to offset the merchandise deficits.

But a flood of foreign goods has wiped out the cushion once provided by investment earnings. This situation has made the United States the world’s largest debtor country as Americans have handed over billions of dollars to foreigners in exchange for imported goods.