Front Page || Main Index || Corpus Christi News || Business || Texas || Sports || Entertainment || Selena
Friday, Sep. 18, 1998
U.S trade deficit climbs to $13.9 billion
American farmers, factories hurt as crisis weakens currencies, makes U.S. exports exports too expensive
By MARTIN CRUTSINGER
Associated PressWASHINGTON - America's trade deficit climbed to $13.9 billion as the global financial crisis cut deeper into sales by American farmers and factories, pushing exports down for a fourth straight month.
The trade report released Thursday by the Commerce Department showed that the July deficit rose by 2.1 percent from June's imbalance of $13.6 billion as American exports of goods and services fell 1.3 percent to $53.6 billion, the lowest level in 17 months.
Imports were down as well but by a smaller 0.8 percent to $89.3 billion. Most of that decline was attributed to a drop in shipments of auto parts from Canada and Mexico because of the General Motors strike.
The U.S. deficit with Pacific Rim countries, where the global currency crisis began 14 months ago, rose again in July and now totals $87.8 billion for the first seven months of this year, 42 percent higher than in 1997. Many Asian countries have fallen into deep recessions, cutting demand for American products. In addition, weaker currencies have boosted Asian imports into the United States.
The financial turmoil in Asia hit Russia last month, sending stocks and the ruble plummeting, and is now threatening Brazil and other countries in Latin America.
So far this year, the U.S. trade deficit is running at a record annual rate of $185 billion, 68 percent higher than last year's imbalance of $110 billion and private economists predicted further deterioration to come.
``The deficit is going to keep climbing and will worsen further next year as the turmoil comes closer to home,'' said Andrew Szamosszegi, an analyst at the Economic Strategy Institute in Washington. ``We are already starting to see the effects of the contagion in Latin America in lower U.S. exports to that region.''
Federal Reserve Chairman Alan Greenspan, testifying before Congress Wednesday, termed the U.S. economy still strong despite the global upheaval, but he conceded ``there are the first signs of erosion at the edges, especially in manufacturing.''
Many economists believe the Fed will move to cut U.S. interest rates by the end of the year to insure that the rising trade deficit doesn't push the United States into a recession.
U.S. economic growth has already slowed dramatically and this has helped to keep inflation under control despite low unemployment.
In a separate report Thursday, the Labor Department said that consumer prices edged up a modest 0.2 percent in August as falling energy costs offset a big jump in clothing prices. So far this year, consumer prices are rising at a slight annual rate of 1.6, the best showing in 12 years.
The deficit with China widened to $5.4 billion in July, the largest imbalance with any country, surpassing perennial front-runner Japan for only the eighth time in history.
America's deficit with Japan narrowed slightly to $5.2 billion in July but so far this year is running 16 percent above the 1997 level.
U.S. Trade Representative Charlene Barshefsky, in Tokyo for meetings to push Japan to do more to deal with the Asian crisis, warned that ``delay has an extraordinary cost for Japan, for the United States, for Asia and for the world.''
President Clinton was scheduled to hold discussions with new Japanese Prime Minister Keizo Obuchi in New York next Tuesday about the U.S. demands.
The July decline in exports reflected a 0.6 percent falloff in sales of American farm products, which dipped to $3.8 billion in July and so far this year are running 7.2 percent below the 1998 level. Lower demand and falling commodity prices have translated into hard times for many American farmers.
Sales of American autos and auto parts dropped by $863 million in July while sales of telecommunications equipment were down $166 million and sales of computer products fell by $166 million.
On the import side, the decline was led by a 1.2 percent drop in foreign oil, which fell to $4.07 billion as the average price per barrel of oil dipped to $10.71, the lowest since August 1986. Imports of autos and auto parts dropped by $1.2 billion in July, reflecting the GM shutdowns.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web