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Trade Deficit Up 50% on Record Drop in Exports : Commerce: Even with services added in, imports outpaced exports by $6.3 billion in January, government says.

March 23, 1994|JAMES GERSTENZANG | TIMES STAFF WRITER

WASHINGTON — The U.S. trade deficit soared 50% in January, driven by a record decline in exports, the government said Tuesday. The jump from the previous month occurred even though the scale for measuring the nation's trade posture was expanded to include its surplus in exported services and deficit in imported merchandise.

The rate of increase, the largest in nearly a year, raised a red flag that trade tensions could mount in coming months. However, the $6.3-billion January trade deficit was far from the highest in recent months.

The Commerce Department, adjusting figures from earlier months to include services as well as merchandise, said the January deficit fell short of the $7.2-billion monthly average for all of 1993. The monthly deficit in 1993 ranged from a high of $8.5 billion in October to a low of $4 billion in January.

The services trade surplus grew slightly in January, but the small improvement was overwhelmed by a $2.3-billion increase in the merchandise trade deficit. Merchandise exports plunged $2.7 billion, surpassing the previous record of $1.8 billion in 1986.

The $6.3-billion trade deficit "is a big number," said Jeffrey Schott of the Institute for International Economics in Washington. "The significant story is that you had a sharp increase in 1993 over 1992, and that trend is not abating. We could see a higher trade deficit this year than last."

In 1993, the United States imported $132 billion more in goods than it exported.

Alan Stoga, an economist at Kissinger & Associates in New York, found a silver lining. The decline in exports reflects the weak economies of many of America's trading partners, he said, while persistently high U.S. imports are "a clear sign of the strength of the U.S. economy."

The measurement of the trade balance was changed to include services to better reflect the overall trade picture and the significant role that non-traditional business activities play in the global economy.

Services include a wide variety of economic activities such as transportation, insurance, education, advertising, research and engineering. They represent 29% of U.S. exports, up from 18% in 1980.

Merchandise includes the more traditional products of an economy: agricultural and manufactured goods, as well as commodities.

"What we learned today was that our trade position in the world reflects a wider variety of forces in addition to those involving the flows of merchandise," Commerce Secretary Ronald H. Brown said in a statement.

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