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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1444)	3/11/1999 11:11:00 PM
From: porcupine --''''>	Respond to of 1722

U.S. Trade Deficit at Record High Filed at 3:37 p.m. EST By The Associated Press WASHINGTON (AP) -- The U.S. deficit in the broadest measure of trade surged to a record high of $233.4 billion last year as the global economic crisis resulted in the first drop in sales of American farm products and manufactured goods in 13 years. The Commerce Department reported that the deficit in the current account jumped by 50.4 percent from the 1997 imbalance of $155.2 billion. While the fourth quarter deficit narrowed a slight 2.9 percent to $63.8 billion, private economists viewed that as a temporary improvement and not a sign of a permanent turn for the better in America's trade fortunes. Cynthia Latta, economist at Standard & Poor's DRI, said she expected the 1999 current account deficit to hit $286 billion, reflecting continued global economic troubles. ''We have a global economic slowdown with recessions in one-third of the globe and slowing growth in Europe. That means weak demand,'' she said. Last year's deficit surpassed the old record of $168 billion in 1987. While the 1987 deficit was equal to 3.7 percent of the total economy, the 1998 imbalance was only 2.7 percent of a bigger U.S. economy. But if this year's deficit does climb to around $290 billion, that would make it equal to 3.3 percent of the gross domestic product. Normally, bulging trade deficits would be a major political problem for the occupant of the White House. But the imbalances this time are occurring as domestic growth remained strong, pushing unemployment to the lowest levels in three decades. Still, Republican Pat Buchanan, announcing his presidential candidacy earlier this month, pledged to fight against cheap imports and make sure that American workers ''are not here to serve the financiers of some new world order.'' The current account is considered the best gauge of the country's international standing because it measures not only trade in goods and services, but also investment flows between countries and foreign aid. The figures released Thursday showed a deterioration in most areas. Exports of American goods fell by 1.2 percent to $671.1 billion last year, the first drop in this category since 1985. Two-thirds of the decline came from falling farm sales and the other one-third from a decline in sales of manufactured goods. The U.S. trade surplus in services, such as airline fares, sales of insurance and consulting fees, fell to $78.9 billion last year, down from a surplus of $87.7 billion in 1997, reflecting primarily a drop in foreign tourism. The deficit in investment income, the difference between what foreigners earn on their U.S. investments and what Americans earn abroad, rose to $22.5 billion, after a $5.3 billion deficit in investment earnings in 1997, the first red ink in this category on record. Before the mid-1980s, the United States was the world's largest creditor country, but as Americans have given billions of dollars to foreigners to pay for deficits in merchandise trade, the country is now the world's largest debtor nation. That means foreigners now have larger U.S. holdings and thus bigger investment earnings than Americans make on their overseas holdings.

To: porcupine --''''> who wrote (1444)	3/11/1999 11:14:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Retail Sales Jump in February Filed at 5:05 p.m. EST By The Associated Press WASHINGTON (AP) -- American consumers continued their spending spree unabated in February, their confidence supported by the best job market in a quarter-century, a stream of tax refunds and booming stock prices. Their buying is helping the U.S. economy shrug off the ill effects of a rapidly rising trade deficit. Sales -- which represent about a third of the nation's economic output -- jumped 0.9 percent last month to a seasonally adjusted $236 billion, the Commerce Department said Thursday. It was the seventh consecutive gain and came on top of robust increases of 1 percent in January, revised up from an earlier estimate of 0.2 percent, and 1.1 percent in December. ''Consumers are aggressively buying everything from apparel to vehicles and anything in between,'' said economist Mark Zandi of Regional Financial Associates in West Chester, Pa. That's helped keep the economy strong as the global financial crisis continued to batter U.S. farmers and manufacturers through a soaring trade deficit. The Commerce Department said the deficit in America's broadest measure of foreign trade, the current account, jumped 50.4 percent last year to a record $233.4 billion. But Commerce Secretary William Daley said the retail sales figures ''show that the robust growth that marked the end of 1998 has continued into 1999.'' That evidence -- with its implication of sustained profits -- drove stock prices to a record close. The Dow Jones average burst both the 9,800 and 9,900 barriers for the first time, settling to 9,897 at the end of trading, a gain of 125 points. The stock and job markets are behind Americans' willingness to buy, especially expensive durable goods such as cars and furniture. The Labor Department said Thursday that first-time claims for unemployment benefits remained under 300,000 for the sixth consecutive week for the first time since 1974. Claims edged up 1,000 to a seasonally adjusted 289,000 last week. ''Strong spending is driving employment and strong employment is driving spending,'' said economist Robert Dederick of Northern Trust Co. in Chicago. ''You have a virtuous circle that is not being broken by inflation, as is usually the case. So the wheels keep turning.'' The latest ABC News-Money magazine poll put consumer confidence this week tied with a record high, set in mid-January. The weekly polls began in 1985. Other factors supporting spending include good weather across much of the country in February, low interest rates and federal tax refund checks, padded by a new $400 per child credit and two education credits. The Internal Revenue Service said the average refund through last week, $1,677, was $227 higher than the same period last year. Analysts, who continue to predict consumer spending will fade as the year progresses, note that tax refunds will remain a factor for only another month or two. They also point to rising mortgage rates, which hit a 10-month high of 7.11 percent this week, according to Freddie Mac, the mortgage company. That should dampen refinancing, which has put money in many consumers' pockets, and home sales, which encourage associated sales of furniture and appliances. Last month, auto sales were particularly strong, up 1.8 percent. And sales of everything else rose a healthy 0.6 percent. Receipts at furniture stores rose 1 percent; building supplies and hardware stores, 1.2 percent; apparel and accessory shops, 1 percent; food stores, 0.9 percent, the most in nearly two years; drug stores, 1.3 percent; restaurants and bars, 0.8 percent; and gasoline stations, 0.8 percent. Sales at department and other general merchandise stores rose 0.5 percent, a decent increase on top of an extremely strong 2.6 percent advance in January.