The Silver Lining
The disappointing increase in the trade deficit of the United States in February conceals some encouraging statistics that should not be forgotten as the nation continues to work toward a balance in its trade.
The most encouraging element was the continued growth of exports of manufactured goods, which increased $1.1 billion to a total of $16.1 billion. The major elements of those exports were automatic data-processing equipment and office machinery, $1.7 billion; electrical machinery, $1.6 billion; chemicals, power-generating equipment and auto parts, each worth $1 billion. In sum, the exports depicted an American economy able to compete in the world market, its competitiveness obviously improved as the value of the dollar has declined to more realistic levels.
There was also growth in agricultural exports, up $279 million, with a $1-billion surplus over imports in the farm account, the largest surplus since 1984. Altogether, farm exports came to $3.2 billion in the month of February. Soybeans alone accounted for almost 19% of the farm exports, followed by wheat, cotton, corn, and vegetables and fruit. Some of the farm-export growth was accomplished at a high price for taxpayers, however, under subsidy programs for such commodities as wheat, cotton and corn.
Some economists took further encouragement from an analysis of the imports. Preliminary indications were that there had been a slowing of growth, if not a direct decline, in consumer goods and a significant increase in capital goods and machinery. Capital goods and machinery imports can contribute over time to improved productivity and be signals of strength in the economy.
Whatever uncertainties were generated by the unexpected rise in the trade deficit, there was nothing in the report to justify a retreat to protectionism. On the contrary, the trade figures should encourage Congress to continue with its efforts to strip away the remnants of protectionism, rigidity and special privilege that still are part of the omnibus trade bill.
The 5.5% growth in exports in February signals a turnaround in the American economy that must be encouraged, not frustrated, as the trade legislation is put in final form. The exports, as Treasury Secretary James A. Baker III noted, “are 2% higher than a year ago and growing at double the rate of imports.”
That growth, that ability to compete, demonstrate again that the national interest will best be served by legislation that facilitates the negotiating authority and flexibility of the President in the new round of global trade talks now under way.
