U.S. Trade Deficit Jumps 11% in 3rd Quarter

The trade deficit jumped 11% in the third quarter, just as Asia’s financial problems began surfacing, the government said Wednesday in a report that could foreshadow even bigger deficits to come.

The deficit in the current account, the broadest measure of the nation’s trade performance, rose to $42.2 billion in the quarter from $37.9 billion the previous quarter, largely on shrinking exports and rising imports. It was the highest since a $42.8-billion deficit in the .third quarter of 1996.

Analysts said the trade picture will deteriorate further as struggling Asian nations seek to regain their financial footing by exporting to the United States and other markets while buying fewer American-made goods and services.

“What we see here is a hint of things ahead--a current account deficit that is going to swing between the third quarter of 1997 and the third quarter of 1998 on the order of $50 billion to the negative,” said economist Allen Sinai of Primark Decision Economics Inc. in Boston.

The report also showed that Japan was selling Treasury bonds as early as last summer to raise funds to deal with its own financial problems, a development that has worried investors and could unsettle financial markets.

American companies are already reporting that the financial problems in Asia are affecting their businesses.

In New York, the bank J.P. Morgan & Co. said Wednesday that its revenue in the fourth quarter had been sapped by “unsettled market conditions globally.”

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U.S. Current Account

The broadest measure of U.S. foreign trade. Quarterly balance, in billions of dollars:

Third-quarter 1997: -$42.2

Source: Commerce Department