Change Set in Figuring Trade Deficit
The Commerce Department, freed from a nine-year-old legal restriction originally enacted by Congress to make initial reports of the nation's trade deficit look bigger, next week begins to publish figures in a way that will appear to make the deficit smaller.</br></br>In recent years, changes in the monthly merchandise trade deficit sometimes have had a major affect on the stock market, long-term interest rates and the value of the dollar. Investors now will be able to react to two different measures of the deficit, which will be published simultaneously.</br></br>The difference, expected to take about $1.5 billion off each month's merchandise trade deficit, will be on the import side of the ledger. Since 1979, the department's Census Bureau has been required by law to include not only the value of goods shipped from abroad in the initial trade reports, but also the cost of insuring and transporting the goods.</br></br>Insurance and freight charges -- which are services, not goods -- are not added to the value of exports. This makes the difference between exports and imports, which is the deficit in goods trade, look higher than it really is.</br></br>Before 1979, the Census Bureau simultaneously published figures for imports on a customs-value basis, with just the value of the goods included, and also on a cost-insurance-freight basis.