WASHINGTON -- The U.S. trade deficit grew in March to a six-year high, as record imports outpaced exports, evidence that Asia's economic crisis is producing the double bonus for the United States of restraining growth and keeping inflation in check.
The trade shortfall increased to $13.0 billion in March from a revised $12.2 billion in February, the Commerce Department said yesterday. Imports of goods and services rose 3.8 percent in March, while exports increased 3.3 percent.
Exports to Asia have declined, helping rein in the U.S. economy to a pace more in line with the wishes of Federal Reserve policy-makers. At the same time, imports from Asia have surged as the dollar has strengthened against the Japanese yen, deterring U.S. producers from raising prices.
"So you have offsetting effects," Treasury Secretary Robert Rubin said on NBC television's "Today" an hour before the report was released. "The balance will probably be a slight slowdown, but I think we'll continue to have solid growth and low inflation."
The U.S. trade deficit with Pacific Rim countries -- which accounts for almost all of the overall gap -- widened in the first quarter to $34.3 billion from $24.3 billion in the first quarter of 1997. U.S. exports to Asia were 9.4 percent lower in the first quarter compared with a year earlier, while imports were 7.9 percent higher.
The dollar has risen about 22 percent from its low point last June and is close to a seven-year high.
Fed Chairman Alan Greenspan has predicted that Asia's economic woes will slow growth in the U.S. to noninflationary levels. "Certainly Greenspan is right, because it's there in the numbers," said Diane Swonk, deputy chief economist at First Chicago, NBD. "What's uncertain is how big the drag will be going forward."
The trade deficit with Europe also jumped significantly in March, as imports of European-made products surged 22 percent. Aircraft shipments again played a role, with U.S. airlines taking delivery of three aircraft made by Europe's Airbus Industrie.
The dollar had also been strengthening against the British pound, deutsche mark and French franc, making goods from those countries cheaper.
March's deficit was the largest since 1992 when the government began tracking both goods and services trade on a monthly rather than quarterly basis. Before then, only merchandise trade was measured monthly.
For the first quarter, the trade deficit in goods and services totaled $36.821 billion, up from $29.323 the first three months of last year and the largest since the fourth quarter of 1987, when the deficit was $38.767 billion. For all of 1997, the deficit widened to $113.684 billion, the largest since 1988.
The merchandise deficit with Japan widened to $5.757 billion in March from $5.291 billion during February and $4.608 billion in March 1997. The deficit with China increased to $3.763 billion in March from $3.498 billion during February and $2.589 billion during March 1997.
Pub Date: 5/21/98