|
U.S. trade deficit narrows
|
 |
June 20, 2000: 11:39 a.m. ET
April gap eases to $30.44B as imports falter, exports at near-record high
By Staff Writer M. Corey Goldman
|
NEW YORK (CNNfn) - The U.S. trade deficit narrowed in April from a record the month before as demand for imported goods faltered for the first time in a year and a half and oil prices staged a temporary retreat, government figures released Tuesday showed. Exports were at a near-record high.
 The trade deficit, which measures the amount of money spent on imports coming into the United States versus the amount received from exports leaving the country, narrowed in April to $30.44 billion. That was slightly less than March's revised record $30.6 billion deficit, though well above the $29.5 billion gap expected by economists, according to a poll by Briefing.com.
The near-record deficit countered recent economic reports indicating that the U.S. economy, now in a record 111th month of uninterrupted expansion, is responding to the Federal Reserve's series of interest rate increases over the past 12 months. Indeed, the report showed that demand for imports remains exceptionally strong; a situation that could persuade Fed official's to continue raising rates to cool the resilient pace of the economy.
"Record or near-record trade deficits spark howls of concern about the threat posed to the economic expansion, but like inflation, the trade deficit's bark has been far worse than its bite," said Bill Cheney, chief economist of John Hancock Financial Services in Boston. "April's deficit, another near record, simply shows that we are still importing like there is no tomorrow."
Countering the trend
The near-record trade imbalance is a concern for analysts and investors because it reflects, in part, the U.S. consumers' uninhibited desire to buy, despite the fact that the Fed has tried repeatedly to deter consumer spending by raising the cost of borrowing by almost 2 percent during the past year.
 The reason the trade deficit is a threat to the economy is the striking imbalance between what American consumers and companies pull into the country and what they send back out to the rest of the world, something Fed officials, including Fed Chairman Alan Greenspan, worry could create too much demand at home and too little supply from abroad.
At the same time, financial markets registered little reaction to the report, with the dollar and U.S. bonds posting a limited reaction to its release.
Most analysts on Wall Street expect that recent economic evidence showing faltering job growth, slower manufacturing output, stagnating wages, subdued spending, and slowing home sales, among other factors, will keep Fed officials from lifting short-term rates at their policy meeting on June 27-28. The Fed's policy setting arm, the Federal Open Market Committee, last raised rates May 16 by a half point to 6.5 percent.
Peter Morici, a senior fellow with the Economic Strategy Institute in Washington, told CNNfn on Before Hours that he expects the trade balance may widen even further in the months ahead, reflecting continued strength in the economy and demand for imported goods. That could convince the FOMC to lift rates at their late August policy meeting. (144KB WAV) (144KB AIFF)
Petroleum prices ease
Lower petroleum prices as well as fewer imports of industrial supplies and materials pushed overall imports down 0.2 percent to $117.1 billion in April. At the same time, imports of capital goods, such as computers and telecommunications equipment, rose.
The temporary lull in oil prices pushed the overall deficit lower for the month. The average price for imported oil declined to $24.42 a barrel in April from $26.38 in March, the first drop since June 1999. The futures price of a barrel of crude fell to less than $24 in mid-April, but has since rebounded.
As for exports, a drop in shipments of autos, auto parts and industrial supplies and materials offset gains for capital goods such as airplanes, the Commerce Department said, leaving April's exports little changed from March's figure at $86.7 billion. Exports of goods alone, excluding services, were a record $62.6 billion in April.
As for trade imbalances with other nations, the deficit with Japan surged to a record $7.33 billion in April from $6.83 billion in March. Imports from Japan were the second highest ever recorded. The deficit with Canada jumped to $3.91 billion compared with $3.52 billion the month before. The deficit with China rose to $5.84 billion from $5.1 billion, while the gap with Western Europe narrowed to $4.65 billion from $5.86 billion.
Separately, the Commerce Department reported Tuesday that the nation's current account deficit -- the broadest measure of goods, services and investment that flow into and out of the country -- widened to a record $102.3 billion in the first quarter from $96.2 billion in the fourth quarter. 
|
|
|
|
|
 |
|
