WASHINGTON — The U.S. merchandise trade deficit, hurt by a huge foreign oil bill and an unexpected surge in car imports, climbed to $11.61 billion in October, the biggest imbalance in almost three years, the government reported today.
The Commerce Department said both U.S. exports and imports hit all-time highs, leaving the October deficit a giant 24.5% higher than September's deficit of $9.33 billion.
The country's October trade performance surprised economists who had been looking for the number to remain virtually unchanged. Some analysts said the sharp deterioration will make the start of the new recession even more severe than had been expected.
Economists said the October report suggests that what had been the one bright spot in a lackluster economy, a narrowing trade deficit, will not be available to help cushion the start of the downturn in the October-December quarter.
They also said the big rise in imports suggests that retailers will be stuck with bloated inventories that could dampen production and make the downturn last longer.
"This is a bad number," David Wyss, an economist with DRI/McGraw-Hill, said of the October trade gap. "It suggests that we are not going to get as much help from net exports as we had hoped and it suggests there is more inventory out there than we had thought."
Much of the deterioration came from a 17% jump in America's foreign oil bill, reflecting the huge jump in world prices after Iraq's August invasion of Kuwait.
Oil imports rose to $7.23 billion in October, the highest monthly total since April, 1981.
The total trade gap widened to its largest imbalance since a $12.56-billion deficit in February, 1988.
U.S. exports climbed 8.6% to an all-time high of $34.77 billion.
This increase was viewed as good news that America's export boom, the source of much of the economy's strength in the last three years, is continuing.
But imports were up in October by an even larger amount, climbing 12.2% to $46.38 billion.
The big jump in oil imports reflected a rise in price from $24.31 a barrel in September to $29.04 in October. The volume imported actually fell slightly to 8.03 million barrels a day, down from 8.48 million barrels daily in September.
Merchandise Trade Deficit Billions of dollars, seasonally adjusted; import figures exclude shipping and insurance. Oct. '89: 10.15 Sept. '90: 9.33 Oct. '90: 11.61 Source: U.S. Dept. of Commerce