Data on Economy Raise Concerns

Reports Thursday emphasized troubling trends in two areas of the U.S. economy that worry most economists--trade and employment.

The U.S. deficit in the current account--the broadest measure of trade with foreign countries because it includes investment--mushroomed 15.6% in the second quarter to a record $129.96 billion, while initial claims for jobless benefits last week climbed by 19,000 to 426,000, the highest level in more than four months.

Despite worries raised by such agencies as the International Monetary Fund, U.S. officials have shrugged off the importance of the wider-than-expected current account gap, saying it signaled confidence in the U.S. economy.

“We don’t see any adverse impact of those data. So it’s not a worry or a surprise,” U.S. Treasury Undersecretary of International Affairs John Taylor said. “The main thing is that it’s being financed in an orderly way. The returns are still there and probably will still be increasing as the recovery gets going.”

But it is unclear how strong the recovery will be. The economy expanded at an anemic annual rate of 1.1% in the second quarter and economic reports for the current quarter have been mixed.

The Labor Department report showed that prices for imports were pushed up because of the cost of imported petroleum. Import prices rose by 0.3% in August, after gaining 0.4% in July, in line with expectations. Excluding volatile petroleum, import prices edged up 0.1%.

Labor’s data on unemployment claims provided further evidence that the current hesitant recovery is one fueled by productivity and not by growth in jobs.

“Economic growth is ... still more productivity-driven and as a result it doesn’t create any jobs,” said Diane Swonk, an economist at Bank One. “We’re not going to be seeing a lot of jobs for a while yet.”