Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 18, 1990 TAG: 9004180532
SECTION: NATIONAL/INTERNATIONAL PAGE: A/6 EDITION: EVENING
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The Commerce Department said the 30 percent improvement from a $9.32 billion January deficit came primarily from a big drop in imported oil.
Total imports fell by 7.6 percent to $38.12 billion while U.S. exports, which had hit a record level in January, edged down a slight 1 percent to $31.63 billion. The trade deficit is the difference between what America imports and what it sells abroad.
The changes gave the United States its lowest monthly trade imbalance since December 1983, when it was $5.68 billion.
The February deficit was significantly better than had been expected, but economists said the good news was likely to be shortlived.
That would be a blow to the Bush administration, which is counting on further gains in U.S. exports to lift the fortunes of American manufacturers and provide a boost to a sluggish U.S. economy.
Many private economists said the trade deficit may actually begin rising again this year as the United States grows more dependent on foreign oil and demand for exports weakens because of the strength of the U.S. dollar. A stronger dollar makes American goods less competitive on foreign markets.
Analysts were particularly disturbed by the fact that there were widespread declines in a variety of U.S. export categories. The 1 percent overall drop would have been even larger except for a huge jump in shipments of aircraft.
However, analysts said that was a temporary surge attributed to a backlog in shipments at Boeing, which was idled late last year by a strike.
Donald Ratajczak, head of the economic forecasting project at Georgia State University, said he was looking for a 1990 trade deficit of $105 billion, down only slightly from an $109 billion imbalance in 1989.
"American competitiveness is not improving at the present time and that is going to make it very hard to make further gains," Ratajczak said.
In February, oil imports, which had surged by 44 percent in January, fell by 20 percent to $4.71 billion as both the volume of shipments and the price per barrel dropped.
The big swing in both months was weather-related. A severe cold snap in December depleted supplies and forced record imports in January. However, unusually warm weather in January reduced oil demand in February.
Analysts said that with domestic oil production at 25-year lows, they expect foreign oil shipments to resume rising in coming months with the price expected to climb as well.
"There is no question that we are going to import more oil in 1990 than in 1989 and it looks like we will import that oil at a higher price," Ratajczak said.
by CNB