March Trade Gap Was Wider Than Reported Earlier, Officials Say

The U.S. trade deficit, measured in a way that makes monthly data conform more closely to long-term trends, has not shrunk as much this year as previously reported, the government said on Thursday.

But White House and Commerce Department officials said the new data confirm that the massive trade gap is narrowing.

The Commerce Department said Thursday that the U.S. trade deficit in March was a seasonally adjusted $11.9 billion, compared to the $9.7-billion unadjusted shortfall reported earlier.

For the first three months of the year, the deficit was $37.63 billion on a seasonally adjusted basis, while the unadjusted previously reported shortfall was $34.27 billion.

The department will begin reporting the trade data on a seasonally adjusted basis as well as the unadjusted way it has been reporting them beginning with the April report, which is scheduled to be released on Tuesday.

In preparation for the change, the department restated past trade data to reflect seasonal adjustments. At the same time, it revised the data to more accurately reflect the actual imports and exports of each of the past several months.

Economists said adjusting the data to remove seasonal factors such as weather and number of working days will provide a clearer picture of underlying trends but does not change their perception of the current U.S. trade picture.

No Fundamental Changes

“All we’re picking up is the fact that these are seasonally adjusted, which means that you can compare the first quarter of 1988 with the fourth quarter of 1987 instead of the first quarter of 1987,” said David Wyss, chief financial economist at Data Resources in Lexington, Mass.

“It shows the trend in exports basically as we saw it,” added economist Tom Megan of Evans Economics in Washington.

“There’s nothing in this report that changes the fundamental question,” Megan said. “And the fundamental question right now is, what’s happening on the import side?”

While American manufacturers have been cashing in on an export boom over the past several months, economists have been worried because imports have been stubbornly high, mostly because of stronger-than-expected consumer demand.

Commerce Undersecretary Robert Ortner told reporters that, with seasonal adjustments, the trade deficit had narrowed less dramatically in the first three months of 1988 than the government had first thought.

But, he said the underlying trend was still positive. The White House agreed.

“They did revise the numbers up but the trade data still show a downward trend,” said White House spokesman Marlin Fitzwater.

“The trade deficit is on a downward trend, exports are increasing,” he told reporters at a briefing. “It’s a very encouraging picture in terms of the foreign trade deficit.”

Eases Variations

In the first three months of 1988, the deficit averaged $12.5 billion a month, compared to $14.3 billion in both the third and fourth quarters of 1987.

The purpose of seasonal adjustment factors in reporting economic statistics is to iron out month-to-month variations that distort the underlying trend.

For instance, retail sales always rise in December because of Christmas buying and therefore a big increase would not necessarily mean the economy is accelerating.

The seasonally adjusted data also will have no impact on the overall annual trade deficit figure.

But the department revised the 1987 total to show a $170.3-billion deficit, instead of a previously reported record $171.2-billion gap. The change, which still left the 1987 gap at a record, reflected data not included in the previous estimate.

Ortner said the U.S. trade deficit may not fall below $150 billion this year, and could even be a bit higher than that, if import prices rise as fast as they did last year.

Because of the lower dollar, import prices rose at a 10% pace last year, he said.

If import price increases slow and exports continue to rise at the rapid 25% rate seen recently, the trade deficit could come in below $150 billion in 1988, Ortner said.

The department is expected to revise the March data again on Tuesday when it reports the April data. The revision will reflect updated information based on more complete customs declarations.