U.S. trade deficit hits record

Friday, June 21, 2002

WASHINGTON -- Americans' appetite for foreign-made cars, TVs and clothes propelled the U.S. trade deficit to a record $35.9 billion in April.

The deficit was 10.7 percent higher than the $32.5 billion trade gap reported for March, the Commerce Department reported Thursday.

Imports in April rose twice as fast as exports. Imports of goods and services increased 4.7 percent to $116 billion as the U.S. economic recovery helped to boost consumer demand for cheaper-priced foreign-made goods.

Exports rose 2.2 percent to $80.1 billion. Although countries around the globe are regaining strength after a worldwide slump, they are doing so less quickly than the United States, thus restraining their demand for U.S. products.

"There is only one easy way out of the trade deficit quagmire -- having our trade partners live up to their growth potentials ... which they are not currently doing," said Ken Mayland, president of ClearView Economics. "The next best way to easing the U.S. trade deficit is by breaking down foreign barriers to U.S. exports."

Jobless claims fall

In another report, the number of Americans filing new claims for unemployment insurance last week dipped by 2,000 to 393,000, the Labor Department said. Economists say that's an encouraging sign for workers dealing with a sluggish jobs market.

And the Conference Board said a key gauge of U.S. economic activity rose in May, lifted by continued strength in consumer spending. The Leading Economic Indicators rose 0.4 percent last month to 112.2, after falling a revised 0.3 percent in April.

On Wall Street, that promising news failed to stop stocks from sliding. The Dow Jones industrial average lost 129.80 points to finish at 9,431.77, its lowest close since Nov. 2.

The latest snapshot of trade activity comes as the Bush administration continues to press Congress to pass legislation that would give President Bush greater authority to negotiate new international trade agreements.

The House passed a "fast track" or "trade promotion authority" measure by just one vote in December. The Senate approved a larger package last month that included an expansion of benefits to American workers hurt by free trade. The next hurdle: reconciling the two versions.

Many conservative Republicans were not happy over the Senate bill's worker benefit provisions. Labor and environmental group and many Democrats are leery of the effects of free trade agreements.

Separately, the "current account" deficit, which is considered to be the broadest measure of trade, climbed to a record $112.5 billion in the first quarter of this year, the Commerce Department said in another report.

The current account includes not just the goods and services reflected in the government's monthly trade reports, but also investment flows between countries and unilateral transfers, including U.S. foreign aid payments.

In the monthly trade report, imported cars, parts and engines climbed to a record $16.8 billion in April.

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