U.S. Trade Gap Is at Narrowest Point Since Late in 1983
A big drop in oil imports and a surge in commercial aircraft exports helped cut the nation’s trade deficit to $6.5 billion in February, the lowest monthly figure in more than six years, the Commerce Department reported Wednesday.
Mild winter weather, falling crude oil prices and a stronger dollar caused demand for petroleum imports to decline, while the recovery from last year’s Boeing strike temporarily boosted aircraft sales abroad.
Taken together, the two factors accounted for more than two-thirds of the improvement from January’s $9.3-billion trade imbalance and helped produce the lowest monthly deficit since December, 1983.
The February figures were hailed as “very good news, indeed” by Michael Boskin, chairman of the President’s Council of Economic Advisers. “The overall situation in the U.S. trade picture has been improving for some time, and we are pleased with these numbers,” he said.
Most analysts believe that future gains from oil imports and aircraft sales are unlikely. Beyond those short-term forces, however, they are pleased by steady growth of sales of manufactured goods to other nations.
While U.S. exports dipped $300 million in February to $31.6 billion, the combined export total of $63.6 billion for the first two months of the year compares favorably to the $56.9 billion recorded during the same period in 1989.
Imports dropped $3.1 billion to $38.1 billion for the month, but the January-February import total of $79.4 billion was $5 billion higher than a year earlier.
Most of the orders for goods that landed at U.S. ports in February were placed in late 1989, and those categories showing the sharpest declines reflected the slowdown that crimped U.S. manufacturing late last year and constrained consumption of foreign-made goods.
Besides oil, the import reductions were most strongly felt in consumer goods, capital goods and industrial supplies as well as in most manufactured goods except passenger cars and parts.
“The main thing on imports was that this was a lagged reflection of the weak economy in late 1989--in consumer goods and in capital goods, reflecting the slowdown in capital spending,” said Giulio Martini, an economist with Sanford C. Bernstein & Co. in New York.
“This is not sustainable as the economy improves,” Martini said. “Imports will grow, and we expect larger deficits later in the year.”
But as imports grow, so will exports, many economists believe.
Howard Lewis, an international trade specialist with the National Assn. of Manufacturers, cited the steady improvements in manufactured exports to most segments of the global market over the past 12 months.
“The drop in oil imports may get the headlines, but what stood out was continuing export growth compared to last year’s levels,” Lewis said. “Our exports remain strong despite predictions they would level off. We’d be foolish to write off export growth as a means of lowering our trade deficit.”
Lewis noted that exports to Japan increased by nearly $500 million in February from a year earlier, by $1.4 billion to Western Europe and by $1.6 billion to developing countries.
America’s perennial trade deficit with Japan stood at $3.1 billion in February, up slightly from $2.9 billion in January but well below the $4.7-billion deficit of a year earlier.
The U.S. trade deficit with the “Asian Tigers”--South Korea, Hong Kong, Taiwan and Singapore--fell to $1 billion from $2.2 billion in January, while America posted a small surplus of $46 million with Hong Kong.
Another positive statistic involved a category of goods called advanced technology products. Considered a key to the nation’s long-term ability to compete internationally, exports of these cutting-edge products rose to $7.7 billion in February from $6.9 billion the month before, and the U.S. surplus in that category widened to $3.5 billion from $2.3 billion in January. Imports of high-tech goods were $4.2 billion, down from $4.6 billion in January.
MERCHANDISE TRADE DEFICIT
Billions of dollars, seasonally adjusted; import figures exclude shipping and insurance.
Feb.,’90: 6.49. Jan.,’90: 9.32. Feb.,’89: 8.92.
