TRADE: Falling Deeper Into the Gap

It was a disturbing deterioration of an already dismal situation. The Federal Government revealed that the U.S. trade deficit widened for the fourth month in a row, reaching a record $16.5 billion in July. Moreover, the figures contained a new reason for concern. In previous months the main problem was caused by rising imports, while the export performance was improving. In July, however, imports increased 2%, but exports drooped 5%. The widening trade deficit is confounding economists because they expected it to shrink as a result of the dollar’s two-year, 40% decline. Yet the stock market, possibly buoyed by news that the wholesale price index remained level in July, shook . off the trade figures and broke out of a two-week bearish streak. The Dow Jones average raced upward on Friday to finish at 2608.74, a gain of 47.36 points for the week.