Record U.S. deficit

Press, 30 December 1978, Page 18

Record U.S. deficit

NZPA Washington The United States trade deficit for the year surged past the record set in 1977, and the Government’s economic barometer turned downward in November, said the United States Commerce Department. The 30-month trade deficit r >•» been a major cause of the dollar’s decline against other currencies and has contributed to inflation in the United States. In its monthly report on trade, the department said Americans bought. $1950M more than they sold to other countries in November, a smr'l improvement from the 52130 M deficit in October.

That pushed the trade deficit for the first 11 months of 1978 to $26,740M past the record $26,500M set for all of last year. In another report, the department said its index of leading economic indicators increased 0.6 per cent, the first decline in four months. The index is designed to predict future economic activity, but it would take several months of declines to establish a clear trend.

Contributing to the downturn were declines in stock prices, orders received by factories, speed of deliveries, and the money supply.

While the index was declining, other indicators, such as employment, industrial production, sales and housing construction, remained strong last month. However, Government analysts had feared that increased oil imports in the expectation of a price rise might push the deficit as high as 52500 M to S3OOOM. The Organisation of Petroleum Export Countries (OPEC) voted recently to increase prices by 14.49 per cent under a phased system beginning next month. In fact, oil imports increased to a seasonally adjusted 2.3 per cent in November.