<< Chapter < Page Chapter >> Page >

By the end of this section, you will be able to:

  • Explain merchandise trade balance, current account balance, and unilateral transfers
  • Identify components of the U.S. current account balance
  • Calculate the merchandise trade balance and current account balance using import and export data for a country

A few decades ago, it was common to track the solid or physical items that were transported by planes, trains, and trucks between countries as a way of measuring the balance of trade. This measurement is called the merchandise trade balance    . In most high-income economies, including the United States, goods make up less than half of a country’s total production, while services compose more than half. The last two decades have seen a surge in international trade in services, powered by technological advances in telecommunications and computers that have made it possible to export or import customer services, finance, law, advertising, management consulting, software, construction engineering, and product design. Most global trade still takes the form of goods rather than services, and the merchandise trade balance is still announced by the government and reported prominently in the newspapers. Old habits are hard to break. Economists, however, typically rely on broader measures such as the balance of trade or the current account balance    which includes other international flows of income and foreign aid.

Components of the u.s. current account balance

[link] breaks down the four main components of the U.S. current account balance for the last quarter of 2014 (seasonally adjusted). The first line shows the merchandise trade balance; that is, exports and imports of goods. Because imports exceed exports, the trade balance in the final column is negative, showing a merchandise trade deficit. How this trade information is collected is explained in the following Clear It Up feature.

Components of the u.s. current account balance for 2014 (in billions)
Value of Exports (money flowing into the United States) Value of Imports (money flowing out of the United States) Balance
Goods $410.0 $595.5 –$185.3
Services $180.4 $122.3 $58.1
Income receipts and payments $203.0 $152.4 $50.6
Unilateral transfers $27.3 $64.4 –$37.1
Current account balance $820.7 $934.4 –$113.7

How does the u.s. government collect trade statistics?

Do not confuse the balance of trade (which tracks imports and exports), with the current account balance, which includes not just exports    and imports    , but also income from investment and transfers.

Statistics on the balance of trade are compiled by the Bureau of Economic Analysis (BEA) within the U.S. Department of Commerce , using a variety of different sources. Importers and exporters of merchandise must file monthly documents with the Census Bureau, which provides the basic data for tracking trade. To measure international trade in services—which can happen over a telephone line or computer network without any physical goods being shipped—the BEA carries out a set of surveys. Another set of BEA surveys track investment flows, and there are even specific surveys to collect travel information from U.S. residents visiting Canada and Mexico. For measuring unilateral transfers, the BEA has access to official U.S. government spending on aid, and then also carries out a survey of charitable organizations that make foreign donations.

This information on international flows of goods and capital is then cross-checked against other available data. For example, the Census Bureau also collects data from the shipping industry, which can be used to check the data on trade in goods. All companies involved in international flows of capital—including banks and companies making financial investments like stocks—must file reports, which are ultimately compiled by the U.S. Department of the Treasury. Information on foreign trade can also be cross-checked by looking at data collected by other countries on their foreign trade with the United States, and also at the data collected by various international organizations. Take these data sources, stir carefully, and you have the U.S. balance of trade statistics. Much of the statistics cited in this chapter come from these sources.

Questions & Answers

the art of managing the production, distribution and consumption.
Satangthem Reply
what is economics
Khawar Reply
okk
damfash
marginal utility is the additional satisfaction one derives from consuming additional unit of a good or service.
Fred
It's the allocation of scarce resources.
Fred
marginal utility please?
Dishan
marginal utility is the additional satisfaction one derives from consuming additional unit of a good or service.
Fred
I know the definition, but I don't understand its meaning.
Dishan
what is the must definition of economic please?
Nurudeen
demand lfs
Alpha
Economics is derived from the word Oikonomia which means management of household things. Thus, Economics is a study of household things with the constrains of allocating scare resources.
Dishan
what is Open Market Operation
Adu Reply
dominating middlemen men activities circumstances
Christy Reply
what Equilibrium price
Adji Reply
what is gap
mirwais
who is good with the indifference curve
Dexter
What is diseconomic
Alixe Reply
what are the types of goods
WARIDI
how can price determination be the central problem of micro economics
simon Reply
marginal cost formula
Nandu Reply
you should differentiate the total cost function in order to get marginal cost function then you can get marginal cost from it
boniphace
What about total cost
Foday
ok
Foday
how can price determination be the central problem if micro economics
simon
formula of cross elasticity of demand
Theresia Reply
what is ceteris paribus
Priyanka Reply
what is ceteris parabus
Priyanka
Ceteris paribus - Literally, "other things being equal"; usually used in economics to indicate that all variables except the ones specified are assumed not to change.
Abdullah
What is broker
scor
land is natural resources that is made by nature
scor
What is broker
scor
what is land
kafui
What is broker
scor
land is natural resources that is made by nature
scor
whats poppina nigga turn it up for a minute get it
amarsyaheed Reply
what is this?
Philo
am from nigeria@ pilo
Frank
am from nigeria@ pilo
Frank
so
owusu
what is production possibility frontier
owusu
it's a summary of opportunity cost depicted on a curve.
okhiria
please help me solve this question with the aid of appropriate diagrams explain how each of the following changes will affect the market price and quantity of bread 1. A
Manuela Reply
please l need past question about economics
Prosper Reply
ok let me know some of the questions please.
Effah
ok am not wit some if den nw buh by tommorow I shall get Dem
adepojurafiu
Hi guys can I get Adam Smith's WEALTH OF NATIONS fo sale?
Ukpen
hello I'm Babaisa alhaji Mustapha. I'm studying Economics in the university of Maiduguri
Babaisa
okay
Humaira
my name is faisal Yahaya. i studied economics at Kaduna state university before proceeding to West African union university benin republic for masters
Faisal
Hi guys..I am from Bangladesh..
Mannan
Wat d meaning of management
igwe Reply
disaster management cycle
Gogul Reply
cooperate social responsibility
igwe
Fedric Wilson Taylor also define management as the act of knowing what to do and seeing that it is done in the best and cheapest way
OLANIYI

Get the best Principles of economics course in your pocket!





Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Principles of economics' conversation and receive update notifications?

Ask