U.S. trade deficit of $5,500M likely

Press, 30 December 1976, Page 5

U.S. trade deficit of $5,500M likely

International

NZPA-Reuter

Washington

The United States appears likely to finish the y ear with a $5,500M trade deficit with the remainder of the world, in marked contrast with 1975, when an SII,DOOM surplus was accumulated.

I he latest Commerce Department statistics show that the United States had a record monthly deficit of $906.2M in November, to bring the over-all deficit for the first 11 months of the year to $5,1 OOM.

Th? department’s'forecasts I [indicated that in those 11 | months exports were running! at an annual rate of I |SII4,OOPM and imports at j $119.500M. If the rales maintain this | level throughout December, it would add another SSOOM to the actual deficit, and unless there is a marked change in world buying patterns, it seems likely that America will continue to spend more abroad next year than other ; countries spend in its favour. This is not as serious a problem as it might seem at first glance, however, since < foreign trade is not nearly as 1 [important to the United

I States economy as it is to[ [countries such as Britain and [Japan. I In America, the foreign sec [tor accounts for a far smaller proportion of total output [than it does in other industrial countries, and, in many respects, a United States trade deficit can be taken only' as a rough guide to the country's economic health. Since America is a net importer Of raw materials, a trade deficit is likely to indicate that the over-all economy is expanding, and not contracting. Two basic factors have contributed to the change in the United States’ .trade picture this year:

iiThe economy’s expansion, toI- gether with the stockpilI . ing of oil in the months before the O.P.E.C. price [ rises in mid-December. increased the country’s •j crude-oil import bill to i about $33,000M — a i [ significant increase over i [ the $25,000M spent on :i oil imports in 1975, [At the same time, the more ■ i stable world agricultural scene has meant that American food sales abroad have not grown nearly as rapidly as they did last year after widespread crop failures. The value of food exports this year is likely to total around 515.400 M.