As Asian Economies Slow, US Exports Slacken
NEW YORK — After outpacing the rest of the globe for years, Asian economies may finally be slowing.
One sign of this pullback came yesterday when the US Commerce Department reported the September trade deficit widened to $11.3 billion, its second worst showing on record. Behind the gulf was a flattening of US exports to Asia, while imports remained relatively high.
The widening of the overall deficit came as a surprise to many economists who had expected a slowing United States economy would dampen demand for foreign products.
The September trade numbers also will impact next week's release of the third quarter gross domestic product revision. With such a high level of imports, economists expect GDP growth was actually weaker than the 2.2 percent annual growth rate initially reported. Merrill Lynch & Co. economist Bruce Steinberg now predicts the GDP will be revised to a 1.5 percent annual growth rate.
Although imports continued to pour in from Asia, the US also picked up its purchases of foreign produced oil. In September, petroleum prices rose as a deal to allow Iraq to export oil fell through. Without the extra supply, oil prices increased. The price rise coincided with efforts by American producers to start to rebuild their inventories for the winter.
Economists believe, however, that the main cause for the widening in the US deficit is a slowdown in east Asia. "It's related to a correction in the computer-related area," says Robert Dederick, a consulting economist with Northern Trust Company in Chicago. "The business has suddenly gone flat."
US competitiveness abroad was not helped by a stronger dollar. When the dollar goes up in value, it makes US exports more expensive.
But economists are optimistic that the trade imbalance will improve in the fourth quarter as economic growth perks up in Asia and Europe. With many imports stuck on store shelves as inventory, demand for foreign goods is expected to wane.
"The fourth quarter may look better," says Mr. Dederick.