Manufacturing trips, trade gap grows
By Associated Press, 1/18/2003
WASHINGTON - Manufacturing stumbled in December, and November's trade deficit swelled to a record. The figures underscored challenges that still face a struggling US economy.
The Federal Reserve reported yesterday that production at the nation's factories, mines and utilities fell by 0.2 percent in December, ending a turbulent year on a disappointing note. Industrial production fell for a second straight year in 2002, the first time that has happened since the 1970s.
''The dangers and risks remain that manufacturing could fall into a new full-blown recession,'' worried economist Clifford Waldman, president of Waldman Associates.
It was a sickly manufacturing sector that pushed the economy into a recession in 2001. Although most economists don't foresee that happening now, they think manufacturers are the weakest link in the economy's recovery.
At factories, which account for most industrial output tracked by the Fed, production declined by 0.2 percent in December, largely reflecting a sharp drop in automobile production.
Production at utilities fell 1.2 percent, while output at mines went up 1.6 percent.
For all of 2002, overall industrial output dropped by 0.6 percent after a 3.5 percent decline in 2001, the first year-to-year declines since 1974-1975.
In other somber news for manufacturers, the US trade gap bulged to a record $40.1 billion in November as imports soared after West Coast ports got back to business after an autumn labor dispute.
The Commerce Department report showed the imbalance between what the United States sells abroad and what it imports swelled by 13.9 percent in November from the October deficit of $35.2 billion.
''The trade deficit ... in November was simply incredible. No, make that incomprehensible,'' said economist Joel Naroff of Naroff Economic Advisors. ''No matter what, it happened. ... Oh, well, I guess we really like foreign products.''
On Wall Street, stocks slumped. The Dow Jones industrial average lost 111.13 points to close at 8,586.74, handing the index its first weekly loss in 2003.
Economists said the ballooning deficit reflected Americans' hearty appetite for foreign-made televisions, toys and other products and resolution of the West Coast dockworkers' labor dispute.
A brief lockout disrupted shipments in early October before President Bush used federal law to get dockworkers back on the job. The dispute had cut into both imports and exports.
In November, imports and exports rebounded. But imports grew more than three times faster than exports, propelling the deficit to an all-time monthly high.
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