WASHINGTON -- The U.S. trade deficit may have improved in June, but analysts predict it will gradually worsen during the rest of this year and slow the nation's economic recovery.
Their comments came after the Commerce Department reported yesterday that the monthly U.S. merchandise trade deficit declined 7.7% to $6.6 billion in June.
The decline, the first since March, resulted from a 7.2% gain in exports that more than offset a 4.7% advance in imports.
"The news is very good with respect to the rebound in exports," said Steven Cooney, international trade analyst for the National Association of Manufacturers.
However, he and other analysts said the trade deficit probably will deteriote during the last six months of 1992 because exports are not likely to increase much more, but imports will probably rise.
Alan Gayle, chief economist of Crestar Bank, explained that the international trade sector will put "something of drag" on the U.S. economy this year, unlike last year when exports fueled a sizable portion of the economy's growth.
"The June [trade] number is a positive, but you have to take the report with a grain of salt," said David Kelly, an economist with Boston Co.
The pace of exports will have to decline as the economies of other industrialized nations remain sluggish, he added.
And analysis said U.S. imports are likely to increase more as the U.S. economy strengthens, albeit marginally.
"Import penetration is relatively sticky," Mr. Cooney said, indicating that American consumer's appetite for foreign goods grows as their economic conditions improve.
According to the Commerce Department, the U.S. trade deficit of $35.5 billion for the first six months of 1992 is 16.4% above last year's pace. "The bottom line is the trade deficit is $5 billion worse than it was in 1991," Mr. Cooney said. "Our only hope of reversing that trend is with stronger export demand."
So far this year, U.S. exports are up 6.4% over last year. Imports for the same period, however, are up 7.7%, the Commerce Department reported.
In general, analysts expect imports to rise with gains in U.S. gross domestic product, dampening hopes that the country will be able to reduce its trade deficit significantly any time soon. However, they do believe the United States will succeed in selling more of its products abroad once the world economic outlook improves.
"We appear to be finding a competitive advantage with certain products," said Mr. Gayle. Regarding the rest of this year, the Crestar Bank chief economist added that he expects growth in imports to speed up and export growth to level off.
In addition, yesterday's trade report shows that U.S. imports and exports both hit all-time highs in June. Exports were $38.3 billion and imports were $44.9 billion.
Mr. Cooney said these records are "very significant," because they show that "the U.S. economy is now, on a daily basis, becoming more integrated into the world economy."
Mr. Gayle explained that increased world integration reduces the threat of inflation to the U.S. economy. He said international trade "tends to keep prices under control" because more of the economy's producers are able to exploit the competitive advantages of their home countries.
The flip side to that is a smaller chance for deflation during recessions because commodity prices tend not to fall as much as they otherwise would, Mr. Gayle said.