April Imports, Exports Hit Record Levels
The highest oil prices since the Persian Gulf War helped widen the U.S. trade deficit as imports and exports climbed to record levels.
The Commerce Department reported Thursday that the deficit in goods and services rose 7.7% in April to $8.63 billion, after a March imbalance of $8.01 billion.
The Clinton administration, which is under heavy fire from Republican critics for a still-widening trade deficit, played down the April increase in imports and stressed instead the growth in exports. It offers proof, spokesmen said, that President Clinton’s emphasis on market-opening trade deals is paying off.
“Today’s numbers are just one example of a broad spectrum of recently released data showing a healthy economy,” Commerce Secretary Mickey Kantor told reporters. “The U.S. economy is continuing to expand and provide increasing opportunity for American workers.”
Kantor noted that the April deficit is 20% lower than the one for April 1995.
Private economists, however, sounded less impressed. They said that although the deficit has closed somewhat from the horrendous levels of early 1995, the pace of improvement has stalled in recent months.
“We are now stuck in a range of monthly deficits of between $8 billion and $9 billion, where we have been since last fall,” said Lawrence Chimerine, chief economist at the Economic Strategy Institute in Washington. “Analysts who had been counting on additional declines in the deficit to spur U.S. economic growth this year are going to be disappointed.”
So far this year, the trade deficit is running at an annualized rate of $98.9 billion, a small improvement over the $105.06-billion imbalance of 1995, which was a seven-year high.
However, two other reports released Thursday do show strength in the economy.
The Labor Department said new claims for unemployment benefits fell by 4,000 last week to 357,000, the first decline in four weeks. And a survey of business conditions by the Federal Reserve Bank of Philadelphia found that economic activity rose significantly in June and that the amount of time between when goods are ordered and when they can be delivered has risen sharply.
Marilyn Schaja, an economist at Donaldson, Lufkin & Jenrette in New York, said she believes the Fed survey is “one more reason to expect the Fed to tighten” rates when policymakers for the central bank meet July 2-3.
According to the trade report, imports of goods and services rose 1.7% in April to a record high of $78.57 billion, reflecting the jump in oil prices and more shipments of foreign cars.
The total for petroleum imports soared 30% to $5.85 billion as the average price for a barrel of crude surged to $19.33, the most expensive since the start of the Gulf War in January 1991. The price was $17.33 in March.
Imports of automobiles and parts rose 4.6% to $10.51 billion in April.
U.S. exports of goods and services also set a record for the month, climbing 1% to $69.94 billion, reflecting greater sales of commercial aircraft and consumer products.
In a separate report released Thursday, the Commerce Department said the first-quarter deficit in the U.S. current account rose to $35.6 billion, a 16.9% increase from the fourth quarter of 1995. The current account is the broadest measure of U.S. trade. It includes not only the goods and services covered in the monthly reports, but also investment flow and foreign aid payments.
The higher current account deficit for the January-March period reflects deficits in goods, investment flow and the category that includes foreign aid, and a smaller surplus in services.
According to the monthly trade report, the overall deficit with Japan edged down 0.2% in April to $4.1 billion. But the deficit with China climbed 28.9% to $2.34 billion, reflecting a big jump in shipments of electronic toys and games.
The U.S. deficit with Mexico also rose sharply, climbing 38.2% to $1.56 billion as imports from that country set a record at $5.9 billion.
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U.S. Current Account
The broadest measure of U.S. foreign trade, quarterly balance in billions of dollars:
Source: Commerce Department