Trade Deficit Shrank Further In September --- Overall Gap for Year to Set Record; Pickup Occurs In Sales of New Homes
WASHINGTON -- The nation's merchandise trade deficit narrowed to $12.56 billion in September as imports of manufactured goods fell, the Commerce Department said.</br></br>It was the second consecutive month of improvement in the overall deficit and the manufacturing figures, following a sharp increase in both deficits in July.</br></br>Many economists, while cautioning against overinterpretation of the figures, suggested that a turnaround in the massive trade deficit may finally be under way in response to the decline of the dollar against major currencies in foreign-exchange trading during the past 20 months.</br></br>The trade deficit remains headed for a record for the year, however. Commerce Secretary Malcolm Baldrige yesterday predicted the gap would swell to $172 billion in 1986 before narrowing by $30 billion to $40 billion next year. The record was last year's $148.5 billion.</br></br>The figures showing even a modest improvement may allow Republicans to dodge a potentially powerful campaign issue for Democrats just before next Tuesday's elections.