U.S., State Economies Still Struggling : Commerce: Trade deficit hits $74.5 billion a year; weekly unemployment figures are the highest in a month.
The U.S. trade deficit ballooned to $7.82 billion in July, the largest in 20 months, as Americans bought more foreign oil and other imported goods while exports of commercial aircraft and other U.S. products declined, the government reported Thursday.
The Commerce Department said the trade gap in July was 16.2% greater than June’s $6.73-billion deficit and came as a surprise to private sector economists, who expected an imbalance of no more than $7.2 billion. Analysts said recessionary pressures in other countries were largely to blame for lower overseas sales of American-made products.
It was the worst monthly U.S. trade deficit since $9.49 billion in November, 1990.
The new figures reflected a further sign of weakness in the already sluggish economic recovery and spelled bad news for President Bush, who has been using trade as a campaign theme, particularly the Administration’s recently negotiated North American Free Trade Agreement, which must be ratified by Congress.
Last year, in the depths of the recession, trade was one of the few economic bright spots, with a surge in exports helping reduce the trade deficit to an eight-year low of $65.4 billion. But the July figures show that the gap is running at a $74.5-billion annual rate for the first seven months of this year.
“This clearly is bad news overall,” said economist Ross DeVol of the WEFA Group. “The so-called growth recession occurring in Japan has reduced their demand for imported goods, and weakness in the European economies has left our exports about even with 1991 levels.”
On another economic front, the Labor Department reported the number of Americans filing new claims for jobless benefits totaled 400,000 for the week ended Sept. 5, the highest weekly total in a month and a figure some experts said will remain high for the rest of the year.
The department attributed the increase largely to the effects of a nine-day strike at a General Motors parts plant in Lordstown, Ohio, and to laid-off workers in the South who were prevented from filing earlier claims by Hurricane Andrew.
On the trade front, the government said U.S. imports edged up 0.6% in July to $45.15 billion, breaking the previous month’s record, as Americans bought more oil, diamonds, toys and foreign tapes and records.
Imports of petroleum products rose to 261 million barrels from 249 million. However, the increased cost of those imports was blunted somewhat because the price of oil fell 14 cents to $18.42 a barrel. Petroleum imports rose from $4.62 billion to $4.81 billion, the figures showed.
July exports fell to $37.33 billion, down 2.2% from June, and were lower for a broad range of goods, including computers, automobiles, chemicals, agricultural machinery and oil-drilling equipment, the Commerce Department said. But most of the decline resulted from fewer sales of jetliners, chiefly by Boeing Co., whose deliveries fell to 25 jets in July from 33 the previous month, trimming $750 million from total exports.
The trade deficit with Japan, whose exports of cars, stereos and other products represent about half the overall trade gap, widened to $3.93 billion in July from $3.39 billion the previous month, the figures showed. The United States also recorded a relatively rare deficit in trade with Western Europe, with a $1.14-billion gap that was the largest in two years.
Analysts said a drop in the value of the dollar in August to postwar lows against the German mark may eventually improve the U.S. trade performance by making American goods less expensive overseas. But they said the effect of the lower dollar will take months to show up in trade statistics.
U.S. Merchandise Trade Since Nov., 1990
In billions
Imports: $45.15
Exports: $37.33
Trade deficit: $7.82
Source: Commerce Department
