- The Washington Times - Thursday, December 20, 2001

America's trade deficit widened by the largest amount in eight years in October, but a forward-pointing economic gauge rose for a second straight month in November, fueling hopes that the current recession will be over by spring.
The Conference Board reported yesterday that its index of leading economic indicators rose by a stronger-than-expected 0.5 percent last month after a gain of 0.1 percent in October.
Analysts read the back-to-back gains as a good sign that the country's first recession in a decade was bottoming out.
The November rise in the index, composed of 10 forward-pointing economic statistics, was led by big a drop in new filings for unemployment benefits, which had soared in October reflecting thousands of layoffs in the airline and hotel industries.
"The leading index is saying the worst is probably over for the recession, but that doesn't mean unemployment won't keep rising for a while," said David Wyss, chief economist at Standard & Poor's in New York.
He said he was looking for a recovery to begin in February or March, but he said unemployment, which now stands at a six-year high of 5.7 percent, will not peak until later in the year at 6.5 percent.
Meanwhile, the Commerce Department reported yesterday that America's trade deficit soared to $29.43 billion in October, an increase of 54.8 percent, which was the sharpest one-month deterioration since June 1993.
In September, the deficit had narrowed by a record amount to $19.01 billion.
Economists noted that the huge swings in both months reflected the government's accounting of payments foreign insurance companies will make in the service category of trade to cover damage claims from the September terrorist attacks.
The government's handling of these claims caused the September trade deficit to narrow by $11 billion only to widen by a similar amount in October.
The deficit in just goods actually showed a slight improvement in October, narrowing by 1.5 percent to $34.99 billion, down from $35.53 billion in September.
So far this year, the total deficit in goods and services is running at an annual rate of $351 billion, down from a record-high of $375.7 billion last year.
However, manufacturers complained that the small improvement reflected the fact that imports, depressed by the U.S. recession, were falling faster than U.S. exports.

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