Shawn Gust, Associated Press
Elaine Cartee searches a job-listing database on Sept. 5 at the Idaho Department of Labor office in Coeur d'Alene.

WASHINGTON — The U.S. trade gap has hit a 16-month high, the job market is shrinking and exports — a rare item in the economy's plus column lately — may slow.

They are signs that the economy may be deteriorating further, analysts and business leaders said Thursday, which could intensify the political debate on how to fix the problems less than 60 days before Americans choose a new president.

The U.S. trade deficit soared in July, the Commerce Department said, as oil imports hit an all-time high. While exports increased, economists expect slowing economies in Europe and Asia will reduce export growth later this year.

The Labor Department also reported that new applications for unemployment benefits fell less than expected last week as the struggling economy continues to take a toll on workers.

And in a sign the job market could get worse, nearly one-third of the country's top executives expect to cut payrolls in the coming months, according to a survey released Thursday by the Business Roundtable, an association of large company CEOs.

Economists welcomed the continued strength in exports, which have been the primary driver of the U.S. economy in a year when the country has been battered by a prolonged slump in housing, rising unemployment and a severe credit crunch.

"There is no question that exports are driving our economy," said Commerce Secretary Carlos Gutierrez in an interview.

But David Resler, chief economist at Nomura Securities, said in a note to clients that export growth "underscores a new vulnerability" for the economy as overseas growth "appears to be slowing abruptly."

Many analysts expect rising unemployment to further crimp consumer spending and slow growth enough to cause the economy to contract in the fourth quarter and first quarter — the classic definition of a recession. The waning effects of the government's $168 billion stimulus package are expected to exacerbate the problem.

That could come just as the new president, either Republican candidate John McCain or his Democratic rival Barack Obama, is settling into the White House.

"The new president and Congress ... are going to have their work cut out for them, and we wish them luck," David Rosenberg, an economist at Merrill Lynch, wrote in a note to clients last week.

The candidates have put forward proposals to keep the economy pumping.

Obama has said he will keep President Bush's tax cuts for families making less than $250,000 a year and would eliminate capital gains taxes for startup companies to jump-start the economy.

McCain has said he would retain all of Bush's tax cuts and slash tax rates for corporations. He has also accused Obama of seeking to erect protectionist barriers that will make America less competitive in the global economy.

The candidates refrained from commenting on Thursday's economic reports as they marked the seventh anniversary of the Sept. 11 terrorist attacks by scheduling a joint appearance at ground zero in New York City.

House Speaker Nancy Pelosi, D-Calif., earlier this week voiced support for a second stimulus package. The first, which included billions in tax rebate checks, is credited by many economists with boosting consumer spending in the spring.

Whoever the new president may be will need to deal with a ravaged housing market, a wounded financial system, tight credit and rising joblessness.

Last week, the Labor Department said the unemployment rate jumped to a five-year high of 6.1 percent in August, as employers cut 84,000 jobs, the eighth straight month of cuts.

Data released Thursday by the department indicated the layoffs are continuing. New jobless benefit claims dropped to a seasonally adjusted 445,000, down by 6,000 from the prior week but above analysts' expectations of 440,000.

The number of people continuing to draw jobless benefits increased to a five-year high of 3.53 million.

Rosenberg said the unemployment rate has jumped 1.1 percentage points since April, the steepest four-month increase since late 1981.

The July gap between imports and exports rose 5.7 percent to $62.2 billion, the Commerce Department said, much worse than the $58.8 billion Wall Street economists expected.

Oil prices rose to record levels of $147 in July, pushing America's foreign oil bill to an all-time high of $51.4 billion.

The big rise in oil prices offset another strong showing for U.S. exports, which rose by 3.3 percent to a record $168.1 billion.

Oil prices fell in August, however. On Thursday they dropped to $100.87 a barrel. A separate report from the Labor Department Thursday showed that the oil price drop reduced the price of imported goods by 3.7 percent in August, the steepest amount in almost 20 years.

That may help reduce inflation and provide some leeway for the Federal Reserve to maintain interest rates at current levels when it meets next week. The Fed has been torn this year between higher prices and a sluggish economy.