U.S. Trade Deficit Narrows In July

By John S. McClenahen U.S. goods and services trade with the rest of the world is still in deficit -- and is likely headed for a record amount of red ink this year. However, in July, the most recent month for which the Commerce Department has data available, the deficit shrunk to $34.6 billion, more than $2 billion lower than the $37 billion that economists generally anticipated. U.S. exports in July were $83.2 billion, $1 billion more than June's $82.2 billion, while imports of $117.8 billion were $1.1 billion less than June's $118.9 billion. "The weakness in imports may owe something to fears of a July dock strike, which encouraged companies to accelerate purchases abroad this [past] spring," speculates Maury Harris, chief U.S. economist at UBS Warburg LLC, New York. In any event, July's narrower U.S. trade deficit along with recent reports showing relatively strong retail sales and inventory accumulation are causing Harris to revise upward his estimate for GDP growth in the current calendar quarter. Harris now pegs third-quarter 2002 GDP growth at a 3% annual rate, up half a percentage point from his previous prediction of 2.5%.

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