Trade Deficit at 4-Year Low in Spring Quarter

The U.S. trade deficit narrowed to $27.72 billion from April through June, the smallest quarterly imbalance in four years, the government reported today.

The Commerce Department said the gap between imports and U.S. exports showed a 2.3% improvement from the first three months of the year, when the trade deficit totaled $28.38 billion.

The improvement stemmed from a 3.4% increase in exports, which climbed to a record $90.87 billion. This more than offset a 2% rise in imports, which also hit a record of $118.58 billion.

The April-June trade deficit, the difference between imports and exports, was at the lowest since a $25.7-billion deficit in the first quarter of 1985.

For the first six months of the year, the deficit was running at an annual rate of $112.2 billion, down 11.7% from the $127.2 billion deficit registered in all of 1988.

However, many economists are predicting the deficit will begin rising in the last half of this year. They are worried that the rising value of the dollar will make U.S. goods less competitive on overseas markets at the same time that Americans’ appetite for imports remains undiminished.

Today’s report on merchandise trade as calculated on a balance-of-payments basis confirmed an improvement already noted in the Commerce Department’s monthly merchandise trade reports.

The totals are slightly different because the new report excludes military sales by the U.S. government to foreign governments and makes other minor adjustments in the monthly figures.

In the April-June quarter, non-farm exports increased $2 billion to a record $80.1 billion. The largest increases were in industrial supplies and materials, capital goods and consumer goods.

U.S. agricultural exports were virtually unchanged at $10.7 billion in the April-June quarter. Wheat shipments dropped $500 million, reflecting a drop in exports to the Soviet Union.

The increase in imports reflected a jump in petroleum imports, which rose 24% to $13.4 billion, with most of the increase coming from higher prices rather than volume. Non-oil imports declined by $300 million to $105.2 billion, with the largest decrease coming from a $1.7-billion drop in foreign car shipments.