1989 Trade Deficit Lowest Since 1984
The U.S. trade deficit narrowed to $113.2 billion last year, its lowest level since 1984, as exports of manufactured products and farm goods posted sizable gains, the government reported today.
The Commerce Department said the increased exports helped overcome a continued increase in imports last year as the country improved its trading position with almost every nation.
The $113.2-billion deficit was an 11% improvement over a $127.2-billion deficit in 1988. It stemmed from a 13.4% rise in exports, which climbed to a record $361.9 billion. This offset a 6.4% increase in imports, which also hit an all-time high of $475.1 billion.
The trade deficit is the difference between imports and exports.
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 and makes other minor adjustments in the monthly figures.
For the fourth quarter, the trade deficit posted an increase of 0.9% to $28.8 billion, following a deficit of $28.6 billion in the third quarter.
This marked the second consecutive quarter in which the U.S. trade deficit failed to improve, a trend analysts have termed worrisome given the fact that the annual deficit remains stuck above $100 billion.
Economists have expressed fears that the deficit could begin deteriorating again in 1990, which would be a blow to President Bush’s economic goals. The Administration is hoping that further sizable gains in exports will spur a resurgence in the U.S. manufacturing sector, which has fallen on hard times in the last year, particularly in the key auto industry.
In the fourth quarter, exports climbed 1.6% to $92.1 billion, but this gain was offset by a 1.4% gain in imports which rose to $120.9 billion. Both imports and exports were at record levels in the final three months of the year, the sixth consecutive quarter they have set new highs.
For the year, non-farm exports were up 14% to $320.4 billion, reflecting widespread increases, especially in capital goods.
U.S. farm sales increased 9% to $41.4 billion. The volume of shipments of corn, wheat and soybeans jumped 24% to record levels, with half of that increase coming in higher sales to the Soviet Union.
The trade gains were held back, however, by a giant 28% jump in petroleum imports, which rose to $50.3 billion, the highest level since 1985. The average price per barrel increased to $17.08, up from $14.34. The number of barrels imported daily increased to 8.06 million, the highest level since 1979, a year in which shortages prompted long lines at gasoline pumps.
Non-petroleum imports were also up last year, rising 4% to $424.9 billion with the largest increases coming in capital goods and consumer goods. However, imports of cars from Japan declined for the third consecutive year, reflecting in part the fact that more Japanese models are being manufactured in plants located in the United States.
