
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, May 20, 1993                   TAG: 9305200040
SECTION: BUSINESS                    PAGE: B8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

TRADE GAP OPENS WIDE IMBALANCE IS WORST IN 4 YEARS

The U.S. merchandise trade deficit widened dramatically to $10.2 billion in March, the worst performance in almost four years, as Americans bought a record amount of foreign goods, the government said Wednesday.

The 29.1 percent jump over February's $7.9 billion deficit reflected across-the-board increases in several import categories including oil, autos, clothing and VCRs.

Analysts said the surprisingly bad trade report would cause the government to reduce its estimate of the economic activity rate during the first three months of the year from an already anemic 1.8 percent to possibly as low as 1 percent.

The deficit with Japan shot up to a 5 1/2-year high of $5.26 billion.

Private economists said it was likely that the trade deficit, which is running at an annual rate of $103 billion so far this year, will top $100 billion for the first time since 1990 and continue rising in 1994, reflecting steep recessions in Europe, especially Germany, and in Japan, key markets for U.S. goods.

"At this point, we believe that Japan will be picking up before the end of 1993, but Europe won't show much recovery until sometime next year, at best," said Bruce Steinberg, an economist at Merrill Lynch.

Imports shot up 9.7 percent to a new record of $49.2 billion. The big rise in imports included a 21.8 percent jump in crude oil and other energy products, which rose $795 million.

Imports of autos and auto parts climbed $409 million; non-automotive consumer imports surged by $1.1 billion, reflecting increases in clothing, toys, portable typewriters, televisions, VCRS and stereos.

Exports were up 5.6 percent to $39 billion, the second-highest level on record. The gain was led by sales of American capital goods overseas, which rose by $1.4 billion. In this category, aircraft sales climbed by $400 million.

Analysts said they did not expect either the surge in imports or exports to continue. They said much of the import shipments wound up as unsold inventories and will have to be worked off in coming months. They said export sales will not show strength through most of this year, given the weakness in overseas economies.

The overall trade deficit of $10.21 billion was the highest since a $10.22 billion gap in May 1989.

by CNB