Trade Deficit Jumps 38.5% but Is Below ’89 Monthly Average
The U.S. trade deficit jumped 38.5% to $8.45 billion in March as record exports were offset by the second-highest level of imports, the government reported today.
Despite the widened gap in March, the deficit was still below the average $9-billion monthly imbalance in 1989. And many economists say the gap, which has improved each year since peaking in 1987, should continue to narrow this year.
Commerce Secretary Robert A. Mosbacher, noting that the $23.9-billion first-quarter trade deficit was the lowest in more than six years, said in a statement that he expects the gap to total less than $100 billion this year. It was $109 billion in 1989.
The Commerce Department said a 4.6% increase in exports in March, to $33.28 billion, was offset by a 10% gain in imports, to $41.7 billion, second only to the record $41.9 billion set last October.
The trade deficit is the difference between what America imports and what it sells abroad.
The imbalance had narrowed to a revised $6.1 billion in February, the smallest deficit in six years, and was down 34.6% from a $9.32-billion gap January.
Many analysts had been expecting a deficit of about $7.8 billion in March, up from the February level but still well below the $9-billion monthly average last year.
Trade improvements are seen as an essential part of any effort to spur economic growth and stem the widening gap between what the government receives and what it spends.
The jump in exports from $31.8 billion was led by automobiles, industrial supplies, and foods, feeds and beverages. It was pulled down by a decline in aircraft shipments that had boosted the February export level.
Imports were up from $37.9 billion in February, led by automobiles, capital goods, consumer goods and industrial supplies. The 10% gain was the largest since a 21.8% advance in September, 1985.
Oil imports totaled 261 million barrels, up 7.4% from February. But prices fell from $19.39 a barrel to $18.18 a barrel in March, making the $4.7-billion import bill virtually the same as the previous month.
As usual, the deficit with Japan was the largest of any country. It totaled $3.6 billion and was followed by China and Taiwan, $600 million each; Mexico and Brazil, $300 million each, and Canada, $100 million. The United States posted a $700-million surplus with the countries of Western Europe.
The trade deficit hit $152.12 billion in 1987 and then dropped to $118.53 billion the following year. The 1989 deficit slid further to $109 billion.
“I think the deficit for ’90 will show a significant improvement over 1989,” said senior economist Bruce Steinberg of Merrill Lynch Capital Markets in New York. “It will get down to about $95 billion or so, maybe even better than that.”
Economists at Fuji Securities Inc. in Chicago also forecast continued improvement. They expect the average monthly gap in the first quarter to total about $7.6 billion, down from $9.1 billion during January-March, 1989.
“Stepped-up export demand stemming from vibrant economic growth abroad, plus reduced import demand caused by sluggish domestic growth, should assure further reductions in the deficit in coming quarters,” they say.