U.S. Trade Deficit Widens in January / Better Than Expected, Say Analysts

THE JOURNAL RECORD, March 18, 1988 | Go to article overview

U.S. Trade Deficit Widens in January / Better Than Expected, Say Analysts


WASHINGTON (AP) - The nation's trade deficit widened slightly in January to $12.4 billion after two months of sharp improvements, the Commerce Department said Thursday.

The excess of imports over exports was up from the $12.2 billion deficit in December.

Exports, which had propelled improvement in November and December, fell by 10 percent in January to $22.3 billion.

The Reagan administration said the figures are better than they appear at first glance.

``There was a seasonal decline in exports, which have dropped in January every year of this decade,'' said Commerce Secretary C. William Verity in a statement. Overall, he said, the figures ``confirm the improving trend'' of the past few months.

``There is obviously a long way to go to eliminate the trade deficit. But we are on the right track,'' Verity said.

Private analysts generally agreed that the January figures should not be read as an indication of a worsening trade balance - and noted that January's figure, although higher than December, was an improvement from both the $13.2 billion November deficit and the record $17.6 billion October shortfall.

``We tend to be very impatient and all expect dramatic improvements every month. But the trade numbers are very time consuming to change,'' said Jay Goldinger, chief economist for Capital Insight, a Los Angeles brokerage house. ``It's a large vessel and it can't move that quickly. But I believe the ship continues to travel in the right direction.''

Analysts had expected a deterioration of the trade balance in January, noting that exports are traditionally down in that month. However, imports also fell in January, by 6 percent to $34.8 billion.

Thus, the deficit for the month - eagerly followed by financial markets - was somewhat better than most analysts had expected.

``It's hard for me to see how we can repeat the same magnitude of growth in exports that we had in the two previous months,'' said Allen Sinai, chief economist for the Boston Company Economic Advisers Ind.

Exports had incrased 9.4 percent in November and 4.2 percent in December to record levels.

Analysts claim that the overall trade deficit is shrinking, but that improvements will be agonizingly slow with many setbacks along the way - like January's.

Still, the fact that imports were down was viewed as a bright spot in the report.

The deficit with Japan - the country with which this nation runs its largest deficit - fell by 17. …

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