Manufacturing exports shine despite weak economy

The week ahead

April 15, 1991|By Chicago Tribune

Those growing ranks of critics who draw ego-boosting sustenance from deriding the excesses of the '80s say the U.S. economy waxed wealthy, but only through a zero-sum game of financial finagling and unproductive layering of debt. Meanwhile, so they say, manufacturing languished. Why, then, are American products continuing to surge on overseas markets? The strength of manufactured exports has been a shining gem on an otherwise bleak economic landscape.

Particularly successful are U.S. computer companies, where the major players, such as International Business Machines Corp., send half or more of their products to other lands.

Another powerful force: aircraft, where the U.S. remains No. 1. As Commerce Secretary Robert Mosbacher told a group of businessmen in Tokyo earlier this month: "We'll know how well we've succeeded when the cash register rings in a big way." The Commerce Department's cash register will ring Thursday, when the agency totes up the U.S. trade deficit for February.

WATCH FOR: A dip in the trade deficit, to $6.1 billion for the month, down from $7 billion in January. Exports should show another jump, after climbing 3.6 percent to a near-record in the January report. Imports are expected to remain weak, partly because of the U.S. economic slump.

AFTERTHOUGHT: "The trade deficit should continue on a modest downtrend for the next several months," says James Haughey, vice president and chief economist for Cahners Publishing in Newton, Mass.

OUTLOOK: Even with vibrant shipments overseas, the rest of the economy remains impeded, says Wayne C. Stevens, president and chief executive of Duff & Phelps/MCM Investment Research Co. here. His list of worries: "the credit crunch, fragility in the banking and real estate sectors, counter-cyclical fiscal policies and financial constraints, and weak consumer fundamentals."

NEXT UP: The Commerce Department Tuesday reports housing starts for March; the Federal Reserve Tuesday describes March industrial production.

CRUNCH TIME: Shareholders are expected to scrutinize American Telephone & Telegraph Co.'s progress on trying to acquire NCR Corp. when the communications giant holds its annual meeting at 9:30 a.m. Wednesday in Chicago. Simultaneously, AT&T will announce first-quarter earnings.

MARKETS: Wall Street spent just about all last week talking about lower interest rates. Although the Federal Reserve held steady, stock prices gained. The Dow Jones industrial average finished the week 24.01 points higher, at 2920.79.

OUTLOOK: The Fed can be expected to lower its key discount rate at any moment, says Marshall Front, executive vice president of Stein Roe & Farnham Inc. of Chicago. "The stock market can smell a discount-rate cut coming," says Front, who believes the economy is starting to show "faint signs of improvement. Buying by consumers is picking up slightly."

ALTERNATE VIEW: "By almost every measure of economic activity, the first quarter was one of the worst in the postwar period," says Joseph Carson, a senior economist at Chemical Bank in New York. "I am still looking for another six months of recession."

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