Trade Deficit Hits Record $39.5 Billion : Import Gap Widens Despite Dollar's Fall

August 27, 1987|Associated Press

WASHINGTON — The nation's trade deficit swelled to an all-time high of $39.5 billion from April to June as a rising tide of imports overtook a smaller increase in exports, the government reported Wednesday.

The Commerce Department said the widening in the gap between what America sells abroad and what it purchases followed a shortfall of $38.8 billion in the January to March quarter, the previous record for a three-month period.

The first-quarter deficit was revised from the $38.3 billion estimated initially.

The new report showed that, despite a large decline in the value of the dollar, which in theory should make U.S. goods more competitive, the deficit worsened in terms of both value and volume.

Imports increased $3.8 billion over the period to $99.5 billion. The volume of imports, which in the first quarter had shown a slight decrease, did a turnabout and rose by 2%. This matched a 2% increase in prices over the period.

The largest increase in the value of imports was in passenger cars from Asia. Imports of Japanese automobiles were up 15% while imports from Korea soared 90%, reflecting the popularity of the Hyundai line.

Deficit Not Improving

All non-petroleum imports increased during the period by 3% to $89.5 billion. Petroleum imports rose 15% to $10 billion.

The new report confirmed parallel figures released earlier which put the second-quarter merchandise trade deficit at $42.7 billion. Wednesday's deficit figure is lower because it reflects trade on a "balance of payments" basis, omitting such factors as the cost of shipping and insurance and military sales.

The balance of payments calculation also adjusts the earlier figures to remove the effects of predictable, recurring seasonal factors.

Analysts saw the report as fresh evidence that the U.S. trade deficit is not showing any improvement, even when import volumes are taken into account.

Exports, overall, increased in the April-June quarter by $3 billion to $60 billion. Analysts said this was a bright spot in the otherwise gloomy report. Exports had decreased just slightly in the first quarter to $56.99 billion, down from $57.02 billion in the last three months of 1986.

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