NEW YORK -- At Zabar's, the Upper West Side mecca for gourmet goods, buyers of exotic imported cheeses and chocolates have seen the impact of the lower dollar in higher prices and soon, says the owner, it will be evident in the cost of fancy food appliances.
The shifts are a direct result of a decline in the value of U.S. currency, notwithstanding a small recent rally, and an indirect consequence of turning around a combined trade deficit in goods, services and investment that extends back to 1981.
This year, the U.S. balance of trade statement may come close to showing a surplus, thanks to a one-time kick from German and Japanese contributions to Operation Desert Storm, a persistent improvement in merchandise exports vs. imports, lower oil prices and some oddities relating to the impact of international interest rates on cross-border investments.
Robert Gay, an economist with Morgan Stanley & Co., projects that within three years the United States could have a surplus for the first time since 1975 in merchandise trade, the closely watched top line of the balance of trade statement. It covers everything from cars to oil to toys to cigarettes.
Another Wall Street economist, Edward Hyman of C. J. #i Lawrence, is even more optimistic: He says he believes a surplus in merchandise trade is possible within a year.
Others disagree. "Our problem is we export the wrong products to the wrong people at the wrong time," said Richard Hoey, chief economist at Barclays de Zoete Wedd. He contends that a worldwide recession, particularly affecting major U.S. trading partners, has already caused exports to slow and that an outright contraction is coming.
Robert Brusca of Nikko Securities, contends the real improvement in trade has been because the recession has slowed imports -- a cyclical, not fundamental, change that will unwind as soon as the U.S. economy begins to grow again.
Still, any optimism about U.S. trade is a marked shift from most of the past decade, when the country's appetite for imports soared while the global demand for U.S. goods merely crawled ahead. A recent reversal in that trend transformed a 1989 $1.7 billion trade deficit with Western Europe to a surplus of $4 billion last year. Even the deficit with Japan dropped significantly, from $49 billion to $41 billion.
"The growth in our exports has been not very sexy stuff," said Mr. Gay. "Its a lot of mundane items in consumer goods other than autos, from razors to cosmetics to printed material to ceramics that we have never made the effort to export and now are finding we can."
Additional gains are likely as foreign manufacturers react to the lower dollar by transferring production to the United States. For instance, Sony Corp. sold a record $4 billion worth of products in the United States last year but also made a record $1.5 billion with U.S.-produced picture tubes and magnetic tape exported worldwide.
That kind of shift is also possible in car manufacturing, where the United States has one of its largest, and most persistent trade deficits. For Volvo, a 37 percent decline in the value of the Swedish krona in relation to the dollar during the past 2 1/2 years has "put a great strain" on profitability, said Bob Austin, public relations manager.
To offset the currency loss, last month Volvo put through a rare mid-year price increase of 2.5 percent. But it still must reduce costs.
Gains of this type, however, are limited. Some of the countrie with which the United States has large trade deficits, such as China, maintain large cost advantages in labor and are too poor to dramatically increase their imports. And the dollar's devaluation hasn't been uniform. The currency of the United States' largest trading partner, Canada, has moved in the same direction.
Moreover, some aspects of trade elude a cheaper currency or even more efficient production. Back at Zabar's, owner Murray Klein, points to expensive items made by Europe's Krups, Olympia, and Pavoni, and says they outsell U.S.-made items for the same purpose costing far less.
Consumers have standards that go beyond price. As an example, he points to a shiny, heavy, pot by a Swiss company named Spring that sells for $60 and a similarly sized but plainer U.S.-made pot by Farberware costing only $27.
He said, "Whoever wants a Spring won't buy this [Farberware] one for nothing."