Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 19, 1991 TAG: 9104190146
SECTION: BUSINESS PAGE: A7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The Commerce Department said the trade gap narrowed by 25.5 percent from a January deficit of $7.2 billion with the United States posting a string of rare surpluses with countries stretching from Europe to Mexico.
Imports fell 6.4 percent, to a seasonally adjusted level of $38.8 billion, while exports declined a smaller 2.4 percent. At $33.5 billion, U.S. exports were still close to all-time highs set in the past several months.
Commerce Secretary Robert Mosbacher, who has referred to exports as the "engine that has kept the United States in a shallow recession rather than a deep one," said exports so far this year are running 7.7 percent above the level of a year ago.
"We are back producing high-quality products with exports continuing to provide strong support for economic activity in the United States," Mosbacher said.
In the first two months of this year, the trade deficit is running at an annual rate of $75 billion, far below the $101 billion deficit recorded in 1990.
Private economists said that much of the improvement so far is related to the recession reducing domestic demand. They said that once the recovery begins, Americans' appetite for imports will pick up.
"It is gratifying to see the trade deficit decline, though most of the decline is due to the U.S. recession and a big fall in oil imports," said Stephen Cooney, head of international investment for the National Association of Manufacturers.
Cooney said the demand for U.S. goods should continue to increase "as long as there is no acute world recession."
While economists forecast that a recovery in United States would push imports up in the second half of this year, many said they expected the deficit to drop to around $90 billion this year, the first time it has been below the $100 billion mark in eight years.
David Rolley, senior financial economist at DRI-McGraw Hill, said he believed the deficit could drop into the $75 billion to $80 billion range, reflecting the fact that oil prices, currently above $20 per barrel, could fall as low as $17 per barrel in coming months.
The February trade deficit was the smallest since a $5.2 billion imbalance in September 1983.
More than half of the improvement came from a big drop in the country's foreign oil bill, which fell to $3.7 billion, reflecting a drop to $18.58 in the average price per barrel of oil, down $4.40 from January. The volume was down as well, to 5.46 million barrels per day, 0.5 percent below the January pace.
Shipments of foreign cars fell 7.6 percent in February, to a total of $6.65 billion.
The 2.4 percent drop in exports reflected small declines in a number of areas ranging from business capital goods to consumer products. While those setbacks were partially offset by an 18.3 percent jump in farm shipments, some analysts worried that slowing economies overseas will soon cut into demand for American products.
As usual, America suffered its biggest deficit with Japan, a $3.16 billion deficit that accounted for 60 percent of February's total deficit.
Other deficits in February included a $773 million imbalance with China, a $675 million deficit with Taiwan and a $479 million deficit with Canada.
America's trade gap with Germany was $563 million although the United States ran a $1.42 billion surplus with the 12-nation European Community of which Germany is a part.
Other surpluses included $322 million with the Soviet Union, $119 million with Mexico and $53 million with South Korea.
by CNB