The U.S. trade deficit soared to a record $14.5 billion in April as the Asian financial crisis battered American exporters, pushing down sales of everything from commercial aircraft to farm products.
The Commerce Department reported Thursday that the April deficit was 9.5 percent higher than the March imbalance of $13.2 billion, the previous record.While imports declined a slight 0.9 percent in April after hitting an all-time high the month before, U.S. exports fell even more sharply, dropping 2.6 percent as the deepening recessions in many Asian markets cut into U.S. sales.
In a further sign of America's deteriorating trade performance, the government also reported Thursday that the deficit in the widest measure of trade, the current account, widened in the January-March quarter to an all-time high of $47.2 billion. That was up 4.8 percent from the previous record, a $45 billion gap in the fourth quarter of last year.
The widening gap in the current account, which measures not only goods and services but also investment flows and foreign aid, reflected the same adverse trend as the monthly trade figures. The ballooning deficits have been the major U.S. result from the currency crisis that struck Asia a year ago.
While that drag on the economy has been largely offset by booming consumer demand, the Clinton administration has grown concerned that consumer confidence could be rattled if the Asian crisis spreads to other parts of the world and triggers a crash in the high-flying U.S. stock market.
In an effort to contain the crisis, President Clinton for the first time in his presidency authorized the sale of dollars in currency markets to stem a free-fall in the value of the Japanese yen that was threatening to push the Asian crisis into a more dangerous phase.
The effort has proved to be an initial success although economists warned that sentiment about the Japanese currency could reverse again if the Japanese government does not move quickly to deal with a deepening recession.
The Clinton administration is concerned that Asia will not recover until Japan, the world's second-largest economy, starts growing again, serving as a market for Asian goods. A healthy Japan would also improve prospects for American exporters and help to contain America's own swelling trade deficit.
Meanwhile, the Labor Department said new applications for unemployment benefits jumped 13,000 to 327,000 last week. Two states - New Jersey and Kansas - reported some claims stemming from the General Motors strike.
For the first four months of this year, the U.S. deficit in goods and services is running at an annual rate of $149 billion, on track to set a record this year, far surpassing last year's imbalance of $110.2 billion.
The rising deficits have given ammunition to critics of Clinton's open-trade policies and have so far stymied what was to have been a key economic priority of his second term, creation of a Western hemisphere free-trade zone and free-trade agreements with Pacific countries.
The deficit with Japan edged down 6 percent in April to $5.4 billion but is still running 13.3 percent ahead of the same period in 1997.
The deficit with China shot up nearly 14 percent in April to $4.3 billion, the highest imbalance since last October. Clinton will travel to China next week, and Commerce Secretary William Daley told reporters Thursday Clinton will strongly urge the Chinese to lower barriers to American goods.
"Our imports from China are nearly five times as great as our exports to China. It is time for China to press forward much more aggressively with reforms that will open more of her markets to American goods and services," Daley said.