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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: eabDad who wrote (19599)	5/21/1998 10:39:00 AM
From: fred woodall	Respond to of 70976

AMAT 35.625. WSJ article:WASHINGTON -- The U.S. posted a record $13.03 billion trade deficit for March, up sharply from February's revised $12.18 billion gap, making it all but certain that the year's trade deficit will set a record by a wide margin. Some economists also believe the growing trade gap will continue to retard economic growth, giving the U.S. a slower expansion rate in this year's second half. "There's no getting around it; these are pretty awful numbers," said Brian Horrigan of Loomis Sayles & Co., a Boston investment-counseling firm. So far, this year's trade gap is about 70% wider than a year earlier, which itself set a nine-year high. The effects of East Asia's assorted problems -- from prolonged recession in Japan to political upheaval in Indonesia -- greatly explain the worsening figures. "So far, the adjustment to Asia's problems is falling heaviest on exporters," said an analysis issued by First Union Bank. Though March shipments to Pacific Rim nations rose slightly from February, they are down sharply from a year earlier. Some analysts say Asia's track record suggests the region will have a worse year than expected. The trend toward wider deficits was exacerbated by the dollar's strength, which tends to pull in foreign goods while making it more difficult to sell overseas. According to Mr. Horrigan, the dollar's trade-weighted value is about the highest in a decade. But not all of the news was bad. Major economies in Latin America and Western Europe are showing healthy growth, while neighboring Mexico and Canada also remain strong. Thus, U.S. total exports for March showed a big increase despite Asia; the problem is that imports rose even more. "... Our overall trade balances with Europe and Mexico are better than they were a year ago because of rising American exports," said Howard Lewis, vice president for economic policy at the National Association of Manufacturers. For March, total exports of goods and services were $79.41 billion, up a surprising $2.53 billion from February, the Commerce Department reported, while imports reached $92.43 billion, up $3.38 billion from a month earlier. A $20.2 billion deficit in goods was partly offset by a $7.17 billion gain in services. However, the figures may understate the economic significance: For one thing, low import prices disguise volume growth. Analysts suggested the U.S. is unlikely to benefit over the long term, and that any increase of import prices -- especially for oil -- would quickly produce even larger trade deficits. Combined with a record buildup of inventories, a drop in corporate earnings, a decline in manufacturing employment and other factors, some economists predict slower economic growth. "We were comfortable in predicting that the coming slowdown would be a soft landing," said John Lipsky, chief economist for Chase Manhattan Bank. But, he added, trends "raise questions about whether it could be bumpier" than expected. For March, the widest deficits were with China, Japan and, less predictably, Germany. The trade gap with China grew more than $200 million to $3.76 billion, Japan's widened more than $450 million to $5.76 billion, and the deficit with Germany jumped more than $900 million to $2.36 billion. Exports of civilian aircraft, a volatile category, rose more than $1 billion; exports of automobiles and components jumped $500 million, and industrial supplies and materials gained nearly $400 million. Imports of civilian planes and parts rose $1.44 billion, while imports of autos and components were up $1.71 billion.