THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, October 20, 1994 TAG: 9410200404
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium: 62 lines
America's trade deficit shrank by 12.9 percent in August as exports hit an all-time high, a reflection of increased foreign demand for U.S. products ranging from aircraft to cigarettes.
But imports rose to a record level as well, with two chronic trade sore spots, Japan and China, selling more of their goods to Americans than ever before.
The combination left the country with an August deficit of $9.74 billion. While down from July's deficit of $11.19 billion, the August imbalance was still the second highest since the government began compiling monthly data on trade in both goods and services in 1992.
``It is clear that our trade deficit is getting bigger and one of the disturbing trends is that China is becoming another Japan,'' said Lawrence Chimerine, chief economist at the Economic Strategy Institute, a Washington think tank.
The government reported that America's deficit with China soared to a record $3.24 billion, the biggest imbalance the United States has ever suffered with any country other than Japan.
The deficit with Japan climbed to $5.80 billion, third highest in history, as Japanese imports hit an all-time high, reflecting a big jump in autos.
After 15 months of wrangling, the administration reached market-opening deals with Japan earlier this month in the areas of telecommunications, medical equipment and insurance but failed to close a deal in the auto sector, which accounts for almost two-thirds of the trade gap between the two nations.
The administration sought to highlight the record export level that Commerce Secretary Ron Brown said reflected ``both the underlying competitiveness of the U.S. export sector and accelerating recoveries in some of our major trading partners.''
But many private economists said that the U.S. deficit was likely to worsen further this year and early next year, before economic rebounds in Europe and Japan and a slowdown of the U.S. economy work to narrow the trade gap.
``The basic message is that we continue to draw imports like farm animals attract flies,'' said Robert Dederick, chief economist at Northern Trust Co. in Chicago.
Dederick predicted that this year's deficit will jump by 52 percent from last year and remain at that high level in 1995. So far in 1994, the deficit in merchandise is running at an annual rate of $147 billion, second only to an all-time high of $152.1 billion set in 1987.
For August, merchandise exports rose 9.3 percent to a record $43.88 billion, a gain of $3.75 billion from July. The upturn reflected big gains in sales of commercial aircraft, industrial machinery, computer chips, cigarettes, autos and auto parts.
Merchandise imports climbed 3.7 percent to a record high of $58.18 billion, a gain of $2.1 billion from July. Half of that increase reflected higher imports of autos and auto parts with other big gains coming in foreign shipments of clothing, computer chips.
KEYWORDS: EXPORTS ECONOMY TRADE DEFICIT by CNB