WASHINGTON — The U.S. trade deficit in goods, services, and investments narrowed to $39.030 billion in the second quarter as export demand strengthened, government figures showed yesterday.
The so-called current account balance is the broadest measure of international trade. The second-quarter deficit is down from the first quarter, for which the U.S. posted a deficit of $39.972 billion, initially reported as $40.966 billion.
A decline in the trade deficit in goods and services more than offset an increase in net capital flows abroad, Commerce Department analysts said, leading to the narrower second-quarter current account deficit.
Still, imports into the U.S. could be poised to increase in the months ahead — outpacing export growth and causing the trade deficit to widen. The reason: a rebound in consumer spending.
“Impressive job growth, robust gains in income, stock market wealth and high levels of confidence indicate that consumer spending will likely remain strong through the remainder of 1997,” said Scott Brown, an economist at Raymond James & Associates in St. Petersburg, Fla., before today’s report.
The report provided a more complete picture of import and export activity than the Commerce Department’s monthly trade statistics because it includes information on investments and investment income.
However, analysts don’t track the quarterly report as closely as they once did, now that the monthly trade report covers services as well as goods. The July trade report will be issued next Thursday, and analysts expect a wider shortfall of about $9.6 billion for the month.
Commerce Department figures released Aug. 20 showed that June’s deficit in goods and services trade unexpectedly
narrowed to $8.158 billion as exports posted a record and imports declined. However, the politically sensitive trade deficits with China and Japan widened in June.
And Japan’s overall current account surplus, which includes trade in goods and services rose 62.7 percent in July from a year earlier, a new report from Tokyo showed today.
News such as that troubles the Clinton administration and gives senior U.S. officials further reason to call on Japan to fulfill its promise to further open its markets to imports and spur domestic demand-led growth.
“Japan’s government has indicated a clear commitment to growth which is led by internal demand,” White House economist Janet Yellen said yesterday. “We want to see healthy economic performance and growth in Japan. How they fulfill this commitment is a matter of their own decision.”
This year’s trade deficit in goods and services is on target to match last year’s total of $111.0 billion — the largest since 1988 — as importers plan for a busy holiday shopping season. Imports of motor vehicles and parts from Japan also continue to increase.
A source of increasing imports could be Thailand and other Southeast Asian economies suffering through a currency crisis.
Pub Date: 9/12/97
