U.S. Growth Slows as Exports Drop Sharply

The world’s financial turmoil and the related deep recessions in Japan and several other Asian nations are levying an increasing toll on the U.S. economy, two government reports said Wednesday.

The trouble overseas has caused a sharp decline in exports, which helped boost the U.S. trade deficit to a record $61.3 billion from July through September, the Commerce Department reported.

And a “contraction in export industries” was a principal cause of a slowdown in the nation’s economic growth last month, according to the Federal Reserve’s latest survey.

Nevertheless, the Fed’s 12 regional reserve banks, which conducted the survey, all concluded that the economies in their districts continued to expand. Leading the way was construction, spurred by low interest rates. In addition, “consumer spending was up, but several districts said sales were weaker than expected” by retailers, the survey summary said.

The report noted production cutbacks in a wide range of manufacturing industries that export, face competition from imports or both. On the list were agricultural equipment, apparel, chemicals, energy-related equipment, lumber, paper, some high-tech products and primary metals, particularly steel. Agricultural exports were also down, the summary said.

Meanwhile, the Commerce Department reported that the bleak performance of exports was one reason for the jump in the deficit of the U.S current account, a broad measure of trade that includes not only imports and exports of goods and services, but also items such as earnings on foreign investments here and abroad and money sent home by immigrants.

The trade deficit grew 8.1% in the third quarter from $56.7 billion in the second.

The large deficit in goods trade, $64.4 billion, was unchanged from the April-June period, but the deficit in net investment income grew by $2 billion and the surplus in trade in services narrowed by $2 billion.

Most of the decline in the services surplus was due to a $1.9-billion drop in travel by foreigners to the United States.