Trade deficit expanded, but export growth still strong in 1997
Last year was another bad one for the nation's balance of payments. The trade deficit increased to about $114 billion, its highest level since 1988.
Last year was another bad one for the nation's balance of payments. The trade deficit increased to about $114 billion, its highest level since 1988. Nevertheless, export growth was still strong evidence that American companies have continued to make progress toward greater global competitiveness in a variety of product markets.
For many years now, the U.S. has recorded a substantial deficit in the trading of goods, which has been only partially offset by a solid surplus in trading of services. During 1997, the value of goods imported into the country exceeded the value of goods exported by approximately $199 billion. At the same time, our comparative advantage in the trading of travel, financial, and other services amounted to about $85 billion. The goods trade imbalance rose by 4.1% last year, while our surplus in services registered a slightly larger increase of 6.4%.
Goods constitute about 79% of our total trade activity -- imports and exports -- with the rest of the world, so any progress on the trade front is critically dependent upon American manufacturers exporting more. And there's plenty of evidence that the cost-cutting and capital investments that American industrial firms have made throughout this decade have helped improve export growth rates. U.S. goods are not only more price competitive in world markets than they were earlier in this decade, but they are considered to be of demonstrably higher quality than during the past few decades.
Export growth strong for 1997
(Increase for selected capital goods, %)
Industrial engines 21.8
Measurement, test, and control equipment 19.8
Material handling equipment 18.5
Telecommunications equipment 17
Drilling and oil field equipment 17
Computer accessories 16.3
Aircraft parts 14.5
Motor vehicles and parts 12.9
Machine tools 12.3
Business machines and equipment 12.3