DOLLAR APPROACHING LEVEL WHERE US GOODS COMPETE

DOLLAR APPROACHING LEVEL WHERE US GOODS COMPETE

The dollar is approaching a level that will permit more than just U.S. commodities to compete in world markets, according to John D. Connolly, senior vice president in the research department at Dean Witter Reynolds Inc.

It is quite noticeable that the recent rise in U.S. exports has been largely concentrated in commodities such as chemicals and papers, he said. The United States does not do well with highly differentiated manufactured products where quality is important. This pattern, of course, is reminiscent of many less-developed countries, and it does not speak well for the world's largest economy.Writing in the firm's latest Analysts Commentary newsletter, he said that without some improvement in the manufacturing area, it would be difficult to see the trade deficit disappear because our capacity to supply commodities would run out before the job were done.

He concluded, however, there will soon be some surprises in quality manufactured goods exports, enabling us to downgrade the trade deficit from a crisis to merely a problem.

He said the dollar could continue under pressure for some time yet, but the prospect of a free-fall is fading. It will simply grind a little lower before it stabilizes, he said.