Trade Gap Shrinks to 9-Year Low : * Balance of payments: A surge in exports cuts the deficit dramatically in February. But analysts say it may be hard to sustain.
The nation’s trade deficit improved dramatically in February, reaching its lowest level since 1983, the Commerce Department reported Thursday.
However, analysts cautioned that the improvement in the balance between exports and imports may be difficult to sustain in the months ahead.
Exports, which had been declining during the last few months, surged by $2.4 billion over January. At the same time, imports dipped slightly, reducing the deficit more than 40%, to $3.4 billion for the month.
Commerce Secretary Barbara Hackman Franklin hailed the report, noting that exports for the first two months of this year ran 8.1% ahead of overseas sales during the same period last year.
The comparison is significant, because 1991 marked the first time in eight years that the annual trade deficit fell below $100 billion.
However, she cautioned that “the slower pace of economic growth among key for eign markets presents an export challenge for the rest of 1992” and called for stepped-up trade promotion efforts by government and industry.
Private economists were more blunt about the prospects for the future.
“I would be very surprised if we do not see a significant jump in the trade deficit next month,” said Sung Won Sohn, chief economist with Norwest Corp. in Minneapolis.
Alan J. Stoga of Kissinger Associates in New York predicted that larger trade deficits “will reappear and possibly reappear with a vengeance.”
Their pessimism is based on two trends. The U.S. economy apparently has begun to recover, which will increase the nation’s appetite for imported goods.
At the same time, growth in the rest of the industrial world--particularly the crucial markets of Japan and Western Europe--is slowing down, meaning that demand for U.S. exports probably will fall.
“Inevitably, that is a formula . . . for a deterioration and possibly quite a pronounced deterioration in our trade accounts,” Stoga said.
But the outlook is not entirely bleak, some analysts said. Gail Fosler, chief economist for the Conference Board, a New York business research organization, pointed to the fact that U.S. exports to the developing world--which accounted for 46% of all exports last year--are on the rise, growing two or three times faster than sales to industrial countries.
Mexico’s demand for U.S. goods is growing quickly, she said, noting that a significant portion of those exports are capital equipment--a long-term investment that could assure the health of its economy in the future.
“The U.S. is really well positioned to take advantage of growth in those areas,” Fosler said.
While the course of the trade deficit is likely to be shaped by cyclical forces in the near future, Stoga said, the long-range outlook hinges on how well U.S. industries restructured themselves during the late 1980s to compete in the global marketplace.
Not until global economic growth resumes will it become clear how successful those efforts have been, Stoga said.
Specifically, he said, the auto industry does not appear to have made much progress, while such industries as steel, apparel and capital goods may emerge as far more formidable international competitors.
Meanwhile, in another bit of good economic news, the Labor Department reported that the number of first-time unemployment claims dipped during the week of April 4. A total of 415,000 newly unemployed workers sought benefits, down sharply from 433,000 the previous week and the fewest since October.
However, the number increased by 5,277 in California, which has been beset by layoffs in such industries as electronics.
The weekly figures are so volatile that economists do not consider them a particularly reliable gauge of long-term employment trends.
Steep Drop in Trade Deficit
Billions of dollars, seasonally adjusted; import figures exclude shipping and insurance.
Feb., ‘92: 3.38
Jan., ‘92: 5.95
Feb., ‘91: 5.50
Source: Commerce Department