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Trade Deficit Hits 3-Month High in February : Commerce: About three-fourths of the $7.2-billion shortfall was with Japan. Gap reflects a slow but steady U.S. recovery amid overseas recession, analysts say.

April 17, 1993|HOWARD LIBIT | TIMES STAFF WRITER

WASHINGTON — The U.S. merchandise trade deficit rose 0.5% in February to $7.2 billion, the highest level in three months, the Commerce Department said Friday.

Almost three-fourths of the deficit was with Japan. The gap between the two countries rose from $3.90 billion in January to $4.13 billion in February.

Analysts said that the overall increase in the trade imbalance was not unexpected, however, and reflects the fact that other nations remain mired in recession while the U.S. economy continues its slow but steady recovery.

"We expected the change to be flat, and it came in as flat as a pancake," said economist David Wyss of Data Resources Inc. "It is confirmation that things are fairly slow overseas."

The report was released just hours before President Clinton met with Japanese Prime Minister Kiichi Miyazawa at the White House. Clinton pledged to vigorously pursue efforts to reduce the trade imbalance with Japan.

Commerce Secretary Ronald H. Brown, who is scheduled to visit Japan next week, also promised that the trade gap will be the "driving item" on his agenda.

"My message will be that an aggressive stimulus package and a comprehensive reform of Japan's structural barriers will mean not just an improved trade balance, but a higher standard of living and improved quality of life for Japan itself," Brown said in a statement.

The Japanese government already has proposed a $116-billion domestic stimulus plan to help end Japan's prolonged recession, but the plan's effects on the trade deficit will not be seen for several months.

Analysts said the growing gap between the United States and other nations, including Japan, is partly a result of the United States being ahead of most of the rest of the industrial world in the business cycle.

"U.S. economic growth is increasing faster than its major trading partners," said economist Michael Penzer at Bank of America. "Consequently, imports are rising faster than exports."

Penzer predicted that U.S. economic growth will increase later this year, while the rest of the world will remain relatively stagnant. The overall annual trade deficit will, as a result, probably widen to $105 billion by the end of the year, he said.

Other economists also suggested that the trade imbalance will continue to worsen in coming months.

"February was a 'ho-hum' month when compared to January, but when you look at the two months together you see some widening of the trade gap," said economist Robert Dederick of Northern Trust Co. "This is a slower-growth quarter but, assuming domestic growth picks up, on an annual basis we will find that the deficit will be larger than last year."

For the month, U.S. exports rose 0.1% to $37.2 billion, while imports increased 0.2% to $44.4 billion.

Economists pointed out that U.S. exports of automobiles and automotive parts rose $402 million but noted that the increase was offset by a $678-million rise in American purchases of foreign cars and parts.

In other economic news, the Federal Reserve announced Friday that industrial production remained unchanged in March. The combination of a severe East Coast storm and slow consumer spending ended a five-month string of production increases at the nation's factories, mines and utilities.

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