Two trade reports released Friday provided strong evidence that the economic slowdown early this year in California and the rest of the nation was sharper than previously recognized.
One trade assessment showed that California's exports of manufactured goods and other products fell 11.6% during the first three months. Separately, the federal government reported that the U.S. trade deficit in March took its biggest one-month jump on record, climbing to $31.2 billion.
FOR THE RECORD
Los Angeles Times Tuesday May 22, 2001 Home Edition Part A Part A Page 2 A2 Desk 2 inches; 56 words Type of Material: Correction
California exports--California's product exports to foreign countries during the first three months of this year rose 13.2%--a substantial gain and not the decline reported in Saturday's Business section. The error stemmed from incorrect information provided by the Massachusetts Institute for Social and Economic Research, which compiles the state export statistics. See story in Business.
"Exports, which have been a source of economic strength in the past, are actually becoming a drag" on the California and U.S. economies, said Sung Won Sohn, the Minneapolis-based chief economist of Wells Fargo & Co.
Sohn attributed the state and national trade patterns largely to weak demand from Mexico and from Asian nations that are key export markets. He said one reason for reduced demand overseas is the high cost of energy, which has punished economic growth more severely in much of Asia than in the United States.
California's surprisingly big decline in exports was widespread. It hit most major industries and cut the total for the quarter to $26.8 billion, compared with $30.3 billion for the same period last year.
The largest dollar declines came in the state's four biggest export industries: computer and electronic products, nonelectrical machinery, transportation equipment and chemicals.
Likewise, nearly all the big foreign markets for California exports took fewer of the state's products during the first three months of the year. The state's top two export markets, Mexico and Japan, were off 5.8% and 15.2% respectively. But the biggest percentage decline among the state's big export markets was in China, falling 40.7%.
The export data follow recent employment reports showing that job gains have slowed substantially in California this year. But Tom Lieser, senior economist with the UCLA Anderson Business Forecast, said the export figures suggest a sharper drop in the state's economic growth than the job statistics did.
Last year, California exports climbed 22.2% to $119.6 billion. The figures come from the Massachusetts Institute for Social and Economic Research in Amherst, a unit of the University of Massachusetts that regularly assesses exports on a state-by-state basis.
Nationally, the trade deficit in March rose $4.3 billion, or 16.1%--the biggest jump since the Commerce Department began keeping records in their current form in 1992.
The federal report takes into account exports, as do the California figures, but also includes import totals. It showed that the expanded national deficit came from slumping exports and rising imports.
In March, U.S. goods and services exports dipped 1% to $89.5 billion, reflecting widespread declines in manufactured goods ranging from telecommunications equipment to commercial aircraft.
Imports, which had fallen in February, rebounded by 2.9% to $120.6 billion. The increase was led by a $2.7-billion rise in demand for consumer goods, pushing imports in that category to $25.3 billion. It was led by increased demand for toys, clothing, televisions and VCRs.
One factor that may have figured into the trade picture was the 8% rise in the value of the dollar against major foreign currencies in the last year. The rise has made U.S. goods more expensive overseas while reducing the cost of imports to this country.
The March results followed February's trade gap of $26.9 billion, which was the smallest monthly deficit since December 1999. It also contributed to an initial federal assessment that the nation's gross domestic product grew at a better-than-expected annual rate of 2% in the first quarter.
Analysts said the GDP figure, the broadest assessment of national economic production, is likely to be slashed to 1% when a revised figure is released next week.
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U.S. Trade Deficit
The overall gap continues to reflect a deficit in the trade of goods and a surplus in services. In billions of dollars:
Source: Commerce Department Associated Press was used in compiling this report.