Friday, August 20, 1999
Trade imbalance soars
Economists fret about dangers of outflows
BY JEANNINE AVERSA
The Associated Press
WASHINGTON — Americans snapped up foreign-made cars, computers and clothing at a record rate in June, catapulting the half-year trade deficit more than 40 percent ahead of the pace for 1998 when the imbalance reached an all-time high.
The unexpectedly large $24.6 billion June deficit, 16.3 percent above the May level, provided a sobering backdrop Thursday to the opening of hearings by a congressionally appointed panel searching for solutions to U.S. trade woes.
Prominent economists told the U.S. Trade Deficit Review Commission that the current trends are unsustainable and if not reversed, could represent a serious threat to the U.S. economy down the road. This scenario could lead to a sharp drop in the dollar's value, driving down stock and bond prices in the United States as foreign investors dump their dollar-denominated holdings.
Those worries also invaded Wall Street, where the worse-than-expected trade numbers reported by the Commerce Department sent the dollar down against both the Japanese yen and the new joint European currency, the euro.
Stock prices fell as well as investors wondered whether a weaker dollar, by pushing up the price of imports, would make the Federal Reserve even more agitated about inflation prospects. The market has been especially jittery in advance of Tuesday's Fed meeting. It is widely expected that interest rates will rise for a second time this year.
Through the first half of this year, the U.S. trade deficit is running at an annual rate of $236 billion — 44 percent above last year's $164.3 billion record imbalance.
Imports of goods and services posted a 3.9 percent advance in June to an all-time high of $103 billion. U.S. exports, which have suffered from the effects of the Asian currency crisis, did manage a small 0.5 percent gain to $78.3 billion, only the second advance this year.
Cintas chief invests in Ky. Speedway
Bar audits add up alcohol
P&G to donate $500,000 for earthquake victims
Providence Capital buys 7.4% of Baldwin
TRISTATE BUSINESS SUMMARY
Columbus-area malls not for sale
INDUSTRY NOTES: MANUFACTURING
Trade imbalance soars
TRISTATE MARKET SPOTLIGHT
