Trade and Current Account Balances: Statistics

TRADE AND SUMMARY ISSUE DEFINITION BACKGROUND AND ANALYSIS T h e T r a d e D e f i c i t i n 1987 Monthly Trade Performance M e a s u r i n g t h e T r a d e D e f i c i t : Volume Vs. V a l u e I s t h e Trade P i c t u r e Improving? Monthly Trade Balance Q u a r t e r l y Trade Balances C u r r e n t Account B a l a n c e Forecasts FOR ADDITIONAL READING TABLES TRADE AND CURRENT ACCOUNT BALANCES: STAT1STICS The c o n t i n u i n g U.S. t r a d e d e f i c i t i s a major c o n c e r n f o r C o n g r e s s a s i t s e e k s t o promote t h e v i t a l i t y of U.S. e x p o r t s and r e d u c e t h e c u r r e n t i m b a l a n c e between e x p o r t s and i m p o r t s . S i n c e 1983, t h e U n i t e d S t a t e s h a s r e g i s t e r e d one record-breaking t r a d e d e f i c i t a f t e r a n o t h e r . The 1987 d e f i c i t of $171.2 b i l l i o n the highest ever d i s a p p o i n t e d some a n a l y s t s who e x p e c t e d t h a t i m p o r t s would h a v e begun t o d e c l i n e a f t e r n e a r l y 3 y e a r s of d o l l a r d e p r e c i a t i o n . The f a l l i n g d o l l a r , which r e a c h e d a post-war low a t t h e end of December 1987, i s e x p e c t e d t o l e a d t o a r e d u c t i o n o f b o t h t h e m e r c h a n d i s e t r a d e and c u r r e n t a c c o u n t b a l a n c e s i n 1988. During November and December 1987, and J a n u a r y 1988, t h e m e r c h a n d i s e t r a d e d e f i c i t began t o narrow a s s t r o n g e x p o r t g r o w t h outpaced t h e growth i n imports. T h i s t r e n d came t o an a b r u p t , i f t e m p o r a r y , h a l t i n F e b r u a r y when t h e d e f i c i t widened by $1.4 b i l l i o n . T o t a l i m p o r t s were n e a r l y 60% h i g h e r t h a n e x p o r t s . -- -- T h e b r o a d e s t m e a s u r e of U n i t e d S t a t e s i n t e r n a t i o n a l economic t r a n s a c t i o n s , t h e b a l a n c e on c u r r e n t a c c o u n t , i n c r e a s e d from -$141.4 b i l l i o n i n 1986 t o a r e c o r d -$160.7 b i l l i o n i n 1987. The c u r r e n t a c c o u n t d e f i c i t was $39 b i l l i o n i n t h e f o u r t h q u a r t e r of 1987 a $4.4 b i l l i o n d e c r e a s e o v e r t h e t h i r d q u a r t e r ' s r e c o r d - b r e a k i n g $43.4 b i l l i o n . Since 1 9 8 1 , t h e l a s t y e a r i n which a s u r p l u s was r e c o r d e d , t h e c u r r e n t a c c o u n t h a s s t e a d i l y e r o d e d a s m e r c h a n d i s e i m p o r t s i n c r e a s e d and t h e s e r v i c e s b a l a n c e worsened. -- The O r g a n i s a t i o n f o r Economic C o - o p e r a t i o n and Development (OECD), Morgan G u a r a n t y , Data R e s o u r c e s , I n c . (DRI), and WEFA A s s o c i a t e s ( f o r m e r l y Wharton E c o n o m e t r i c s ) h a v e f o r e c a s t t h a t t h e t r a d e d e f i c i t and c u r r e n t a c c o u n t d e f i c i t w i l l b e r e d u c e d d u r i n g 1988 and 1989. ISSUE DEFINITION I n r e c e n t y e a r s , t h e U.S. t r a d e a n d c u r r e n t a c c o u n t d e f i c i t s h a v e e x p a n d e d a t a v e r y r a p i d r a t e . The d e p r e c i a t i o n o f t h e d o l l a r s i n c e 1 9 8 5 may c a u s e t h e t r a d e d e f i c i t t o d e c l i n e d u r i n g t h e n e x t f e w y e a r s . Many e c o n o m i s t s n o t e t h a t , m e a s u r e d i n volume t e r m s , t h e t r a d e d e f i c i t a p p a r e n t l y h a s begun t o narrow. T h e i s s u e f o r C o n g r e s s i s how f a s t t h e t r a d e d e f i c i t w i l l d e c l i n e i n response t o d o l l a r d e p r e c i a t i o n and o t h e r factors. T h i s i s s u e b r i e f p r o v i d e s h i s t o r i c a l and c u r r e n t d a t a on t r a d e and c u r r e n t a c c o u n t b a l a n c e s . F o r e c a s t s of t h e m e r c h a n d i s e and c u r r e n t a c c o u n t b a l a n c e s t h r o u g h 1990 a r e a l s o i n c l u d e d . BACKGROUND AND ANALYSIS The T r a d e D e f i c i t i n 1 9 8 7 The U.S. m e r c h a n d i s e t r a d e d e f i c i t f o r 1987 t o t a l l e d $171.2 b i l l i o n , s u r p a s s i n g t h e r e c o r d - b r e a k i n g 1 9 8 6 d e f i c i t by $15.0 b i l l i o n . The 1987 t r a d e d e f i c i t was 9 . 6 % h i g h e r t h a n t h a t o f 1 9 8 6 . U.S. e x p o r t s , b u o y e d by t h e f a l l i n g d o l l a r , g r e w by 11.4% d u r i n g 1 9 8 7 t o $ 2 5 2 . 9 b i l l i o n . T h e U.S. demand f o r i m p o r t s , h o w e v e r , e x p a n d e d a t a s i m i l a r r a t e ( 1 0 . 7 % ) t o $ 4 2 4 . 1 billion. I m p o r t s e x c e e d e d e x p o r t s by a p p r o x i m a t e l y 67% d u r i n g 1 9 8 7 . D u r i n g t h e f i n a l 2 m o n t h s o f 1 9 8 7 , i m p o r t s w e r e s t i l l 50% h i g h e r t h a n exports. Monthly T r a d e Performance Although t h e r e c e n t monthly r e s u l t s have been s i g n i f i c a n t l y below O c t o b e r ' s a l l - t i m e h i g h o f $17.6 b i l l i o n , t h e t r a d e d e f i c i t s r e m a i n stubbornly high. F e b r u a r y ' s $13.8 b i l l i o n d e f i c i t i s c o n s i s t e n t w i t h t h e r e c o r d a n n u a l d e f i c i t s o f t h e p r e v i o u s two y e a r s . (See Table 1). Based on a 3-month moving a v e r a g e , t h e t r a d e d e f i c i t a p p e a r s t o h a v e p e a k e d d u r i n g t h e months of J u n e t h r o u g h September 1987, and seems t o h a v e The t r a d e d e f i c i t f o r t h e f i r s t 2 m o n t h s o f stabilized. (See Table 2 ) . 1 9 8 8 was - $ 2 6 . 3 b i l l i o n -- a f i g u r e e q u a l t o t h a t r e g i s t e r e d d u r i n g t h e same p e r i o d of t h e p r e v i o u s y e a r . M e a s u r i n g t h e T r a d e D e f i c i t : Volume V s . Value I n r e c e n t m o n t h s , t h e m o n t h l y m e r c h a n d i s e t r a d e d e f i c i t h a s become one o f t h e most w i d e l y watched s t a t i s t i c s . Numerous n e w s p a p e r r e p o r t s , f o r example, have s u g g e s t e d t h a t t h e t r a d e d e f i c i t f i g u r e f o r August ( w h i c h was r e l e a s e d on O c t o b e r 1 4 t h ) was i n s t r u m e n t a l i n t r i g g e r i n g t h e O c t o b e r 1 9 t h s t o c k m a r k e t c r a s h and t h a t t h e monthly f i g u r e s c o n t r i b u t e t o increased v o l a t i l i t y in the dollar. Some e x p e r t s h a v e d i s c o u n t e d t h e importance o f t h e monthly t r a d e d a t a , which a r e e x p r e s s e d i n c u r r e n t d o l l a r , o r n o m i n a l , t e r m s , and have argued t h a t t h e t r a d e b a l a n c e s h o u l d be v i e w e d i n c o n s t a n t - d o l l a r , o r v o l u m e , t e r m s . The v o l u m e - b a s e d d a t a i n d i c a t e d an improvement i n t h e t r a d e d e f i c i t l o n g b e f o r e t h e nominal b a l a n c e improved. What i s t h e d i f f e r e n c e b e t w e e n t h e s e two f i g u r e s ? I s o n e f i g u r e a b e t t e r i n d i c a t o r of t r a d e p e r f o r m a n c e t h a n t h e o t h e r ? Monthly Merchandise Trade Data Jan. 1986 - Feb. 1988 Billions 50 1 ~xoorrs !mocrrs Trade D e f i c ~ t P r e c a r e d by CRS Source: Dept. o f Commerce Merchandise Trade, 1970-87 - - (C.i.f. Imports, F.a.s. Exports) Year -2 0 Billions 0Merchandise lmpor ts Trade Baiance C h a r t prepared by CRS. Source: Depr. o f Commerce Merc3andlse E x p o r t s The n o m i n a l t r a d e b a l a n c e i s a r e c o r d o f Customs S e r v i c e t r a n s a c t i o n s t h a t o c c u r d u r i n g a one-month p e r i o d . I t m e a s u r e s t h e v a l u e of t r a d e f l o w s i n c u r r e n t d o l l a r terms. Thus, i t i s a r e c o r d o f what t h e U n i t e d S t a t e s p a y s f o r i m p o r t s a n d r e c e i v e s f o r e x p o r t s . The m o n t h l y m e r c h a n d i s e t r a d e b a l a n c e i s important because i t p r o v i d e s a measure of U.S, t r a n s a c t i o n s w i t h t h e r e s t of t h e world. To s u p p o r t a m e r c h a n d i s e t r a d e d e f i c i t , t h e U n i t e d S t a t e s m u s t o b t a i n f o r e i g n c u r r e n c y t o p u r c h a s e t h e g o o d s i t w i s h e s t o buy t h a t a r e i n e x c e s s of t h e g o o d s i t s e l l s a b r o a d . The m e r c h a n d i s e t r a d e b a l a n c e h a s a n e f f e c t A l l other things on t h e v a l u e o f t h e d o l l a r i n f o r e i g n e x c h a n g e m a r k e t s . being equal, a t r a d e d e f i c i t w i l l cause t h e value of t h e d o l l a r t o d e p r e c i a t e b e c a u s e t h e s u p p l y of d o l l a r s f r o m A m e r i c a n s w a n t i n g t o b u y f o r e i g n c u r r e n c i e s t o p u r c h a s e i m p o r t s w i l l e x c e e d t h e demand f o r d o l l a r s by f o r e i g n e r s e x c h a n g i n g t h e i r c u r r e n c y t o buy U.S. e x p o r t s . A s t h e v a l u e o f t h e d o l l a r d e c l i n e s , h o w e v e r , i m p o r t s become m o r e e x p e n s i v e , a n d in t h e short-run t h e t o t a l s i z e of t h e nominal t r a d e d e f i c i t t e n d s t o grow b e f o r e i t d i m i n i s h e s o v e r t h e long-run. This i s c a l l e d t h e J-curve e f f e c t . -- -- The v o l u m e o f t r a d e a t t e m p t s t o m e a s u r e f l o w s o f g o o d s w i t h o u t t h e d i s t o r t i o n c a u s e d by p r i c e c h a n g e s . When t h e p r i c e o f s t e e l r i s e s , f o r example, t h e t o n s of s t e e l imported might f a l l o r remain c o n s t a n t , b u t t h e v a l u e of t h a t s t e e l c a n s t i l l i n c r e a s e . O b v i o u s l y , o n e c a n n o t add t o n s of s t e e l t o y a r d s o f c l o t h t o a r r i v e a t a t r u e volume f i g u r e , s o t h e D e p a r t m e n t o f Commerce e s t i m a t e s volume by d e f l a t i n g t h e n o m i n a l f i g u r e s by a p r i c e i n d e x b a s e d o n p r i c e s a n d w e i g h t s f o r a b a s e y e a r currently 1982. T h e volume s t a t i s t i c s i n T a b l e 4 , t h e r e f o r e , a r e a n a l o g o u s t o 11 r e a l " f i g u r e s i n n a t i o n a l GNP a c c o u n t s . -- Some h a v e a r g u e d t h a t t h e volume o f t r a d e i s a more a c c u r a t e m e a s u r e o f t h e e f f e c t o f t r a d e o n t h e n a t i o n a l economy. Trade volumes a r e n o t d i r e c t l y comparable w i t h monthly merchandise t r a d e b a l a n c e s . The f o r m e r f i g u r e i n d i c a t e s t h e q u a n t i t y of e x p o r t s , w h i l e t h e l a t t e r f i g u r e i n d i c a t e s t h e c u r r e n t v a l u e of t r a d e . The d e p r e c i a t i o n o f t h e d o l l a r s i n c e 1 9 8 5 h a s made U.S. g o o d s c h e a p e r f o r f o r e i g n e r s , who h a v e r e s p o n d e d A rapid increase in the by i n c r e a s i n g t h e i r demand f o r U.S. p r o d u c t s . volume of e x p o r t s i s a c l e a r s i g n t h a t f o r e i g n e r s a r e b u y i n g m o r e U.S.made g o o d s , a n d t h i s c o n t r i b u t e s t o a r i s e i n U.S. g r o s s n a t i o n a l p r o d u c t and a l s o t r a n s l a t e s i n t o i n c r e a s e d job o p p o r t u n i t i e s i n t h e U n i t e d S t a t e s . the constant-dollar v a l u e , o r p h y s i c a l volume, of I n 1987, m e r c h a n d i s e e x p o r t s i n c r e a s e d by $ 2 9 . 7 b i l l i o n , o r 1 2 2 , w h i l e t h e p h y s i c a l volume o f i m p o r t s i n c r e a s e d by $ 2 0 . 9 b i l l i o n , o r 5%. The v o l u m e o f i m p o r t s i s i n c r e a s i n g l e s s r a p i d l y t h a n t h e volume o f e x p o r t s , b u t , b e c a u s e t o t a l i m p o r t s a r e a p p r o x i m a t e l y 50% g r e a t e r t h a n t o t a l e x p o r t s , i t may t a k e a number o f y e a r s f o r t h e U n i t e d S t a t e s t o a c h i e v e a s u r p l u s i n t h e t r a d e balance. The U n i t e d S t a t e s T r a d e R e p r e s e n t a t i v e , C l a y t o n Y e u t t e r , h a s p r e d i c t e d t h a t t h e U n i t e d S t a t e s w i l l o n c e a g a i n be r e c o r d i n g t r a d e s u r p l u s e s by 1 9 9 7 . A t p r e s e n t , t h e Commerce D e p a r t m e n t ' s m o n t h l y t r a d e f i g u r e s p r o v i d e o n l y t h e nominal v a l u e of i m p o r t s and e x p o r t s . The Comnerce D e p a r t m e n t r e c e n t 1y a n n o u n c e d t h a t m o n t h l y t r a d e f i g u r e s w i l l b e r e l e a s e d s i m u l t a n e o u s l y i n n o m i n a l a n d volume t e r m s i n l a t e 1988. I s t h e Trade P i c t u r e Improving? The Reagan A d m i n i s t r a t i o n h a s m a i n t a i n e d f o r a number o f months t h a t t h e t r a d e d e f i c i t p i c t u r e i s i m p r o v i n g i n volume, i f n o t n o m i n a l , t e r m s . When e x p r e s s e d i n c o n s t a n t - d o l l a r , o r volume, t e r m s , i t a p p e a r s t h a t t h e t r a d e d e f i c i t h a s improved. The nominal d e f i c i t ( i . e . , t h e "unadjusted" monthly merchandise t r a d e d e f i c i t ) r e p r e s e n t s t h e d i f f e r e n c e ( i n d o l l a r s ) between what t h e U n i t e d S t a t e s e x p o r t s and what i t i m p o r t s . Measured i n n o m i n a l terms, t h e t r a d e d e f i c i t r e m a i n s v e r y l a r g e . On a n a n n u a l b a s i s , F e b r u a r y ' s t r a d e d e f i c i t amounts t o $165 b i l l i o n . A t this level, the t r a d e d e f i c i t w i l l c o n t i n u e t o r e q u i r e a c o n s i d e r a b l e amount of f o r e i g n financing. Some e c o n o m i s t s b e l i e v e t h a t c u r r e n t t r a d e d e f i c i t p r o b l e m s a r e b e i n g e x a c e r b a t e d by t h e d e p r e c i a t i o n of t h e d o l l a r a g a i n s t t h e yen a n d o t h e r currencies. I m p o r t p r i c e s a r e r i s i n g b u t demand f o r i m p o r t s h a s n o t f a l l e n enough t o o f f s e t t h e h i g h e r p r i c e s . Other economists have c o n c l u d e d t h a t t h e t r a d e d e f i c i t w i l l be e x t r e m e l y d i f f i c u l t t o r e v e r s e i n t h e n e a r t e r m b e c a u s e weak economic g r o w t h i n most o t h e r c o u n t r i e s w i l l h o l d b a c k demand f o r U.S. e x p o r t s , e v e n i f t h e v a l u e o f t h e d o l l a r r e m a i n s low. D u r i n g t h e e a r l y 1 9 8 0 s , t h e s t r o n g U.S. d o l l a r weakened t h e U.S. c o m p e t i t i v e p o s i t i o n and f o r c e d many f i r m s t o move p r o d u c t i o n t o o f f s h o r e facilities'. T h i s may have c o n t r i b u t e d t o a s t r u c t u r a l c h a n g e i n U.S. t r a d e p a t t e r n s t h a t w i l l be d i f f i c u l t t o a l t e r . Monthly T r a d e B a l a n c e The t r a d e b a l a n c e ( a l s o c a l l e d t h e m e r c h a n d i s e t r a d e b a l a n c e ) i s p r o d u c e d on a m o n t h l y and a q u a r t e r l y b a s i s . The t e r m r e f e r s t o e x p o r t s of g o o d s minus i m p o r t s o f g o o d s . The m o n t h l y t r a d e b a l a n c e i s t h e most w i d e l y known and f r e q u e n t l y used i n d i c a t o r of U.S. i n t e r n a t i o n a l e c o n o m i c activity. The m o n t h l y t r a d e b a l a n c e i s based on Customs d a t a t h a t i s p r o c e s s e d by t h e Bureau o f t h e Census and i s r e f e r r e d t o a s t h e merchandise t r a d e b a l a n c e (Census b a s i s ) . b a s i s and on a Customs C e n s u s - b a s i s d a t a i s r e p o r t e d on a c . i . f . basis. By l a w (P.L. 9 6 - 3 9 ) , t h e Comnerce Department must r e l e a s e c . i . f . d a t a a t l e a s t two w o r k i n g d a y s p r i o r t o t h e r e l e a s e o f Customs d a t a . The c.i.f. d a t a i n c l u d e t h e v a l u e of i n s u r a n c e , f r e i g h t , and o t h e r c h a r g e s ports-of-entry. The s e c o n d i n c u r r e d i n b r i n g i n g m e r c h a n d i s e t o U.S. f i g u r e i s t h e m e r c h a n d i s e t r a d e b a l a n c e on a Customs, o r f . a . s . , basis, and d o e s n o t i n c l u d e t h e s e s u p p l e m e n t a r y c o s t s . Because t h e c . i . f . b a l a n c e i s r e p o r t e d f i r s t , i t i s t h e most w i d e l y r e p o r t e d t r a d e f i g u r e . Both f i g u r e s a r e m e a n i n g f u l , however. The c . i . f d a t a r e f l e c t c o s t t o data allows f o r a c o n s u m e r s of m e r c h a n d i s e i m p o r t s , w h i l e t h e f . a . 5 . d i r e c t c o m p a r i s o n of t h e v a l u e of e x p o r t s and i m p o r t s . I n August 1 9 8 7 , t h e Commerce Department announced t h a t i t would i n c o r p o r a t e Canadian t r a d e d a t a d i r e c t l y i n t o t h e monthly merchandise t r a d e balance. P r e v i o u s l y , Canadian d a t a on U.S. e x p o r t s t o Canada were used t o produce a n end-of-year reconciliation t o eliminate the u n d e r c o u n t i n g o f U.S. e x p o r t s t o C a n a d a . The U.S. C e n s u s B u r e a u r e p o r t e d i n A u g u s t 1 9 8 7 t h a t t h e U.S. t r a d e d e f i c i t i n 1 9 8 6 was $ 1 5 6 b i l l i o n a d i f f e r e n c e o f $10 b i l l i o n t h a t r e s u l t e d f r o m i n s t e a d of $ 1 6 6 b i l l i o n t h e u n d e r c o u n t i n g o f e x p o r t s t o Canada. The u s e o f C a n a d i a n s t a t i s t i c s h a s r e d u c e d t h e amount o f r e v i s i o n t h a t t r a d e s t a t i s t i c s u n d e r g o a n d , c o n s e q u e n t l y , r e s u l t e d i n t h e r e p o r t i n g of a l o w e r month-to-month d e f i c i t . -- T a b l e 1 p r e s e n t s t h e monthly merchandise t r a d e s t a t i s t i c s f o r 1986, 1987, and 1988. T a b l e 2 p r e s e n t s t h e monthly d a t a i n t h e form o f a t h r e e m o n t h m o v i n g a v e r a g e , w h i c h more a c c u r a t e l y r e f l e c t s t r e n d s i n t h e t r a d e d a t a t h a n t h e somewhat e r r a t i c m o n t h l y f i g u r e . The m e r c h a n d i s e t r a d e b a l a n c e s f o r 1970 t o 1987 a r e p r e s e n t e d i n T a b l e 3 . T a b l e 4 p r o v i d e s d a t a on e x p o r t a n d i m p o r t v o l u m e s . Volume d a t a i s p u b l i s h e d q u a r t e r l y b y t h e D e p a r t m e n t o f Commerce i n t h e G r o s s N a t i o n a l P r o d u c t t a b l e s . Q u a r t e r l y Trade Balances T h e B u r e a u of Economic A n a l y s i s ( B E A ) o f t h e U.S. Commerce D e p a r t m e n t r e l e a s e s t h e q u a r t e r l y merchandise t r a d e balance (balance-of-payments, o r BOP, b a s i s ) a b o u t 3 2 d a y s a f t e r t h e e n d of t h e q u a r t e r . The q u a r t e r l y t r a d e b a l a n c e i s based on a d j u s t e d Census d a t a and more a c c u r a t e l y r e f l e c t s t h e f l o w of i n t e r n a t i o n a l payments connected w i t h m e r c h a n d i s e t r a d e than t h e monthly merchandise t r a d e b a l a n c e (Census b a s i s ) . For t h e q u a r t e r l y m e r c h a n d i s e t r a d e b a l a n c e ( B O P b a s i s ) , see T a b l e 5 . The Current A c c o u n t Balance The c u r r e n t a c c o u n t b a l a n c e i n c l u d e s e x p o r t s o f g o o d s and s e r v i c e s p l u s inward u n i l a t e r a l t r a n s f e r s minus i m p o r t s o f goods & a s e r v i c e s and Services include travel, transportation, outward u n i L a t e r a l t r a n s f e r s . f e e s a n d r o y a l t i e s , i n s u r a n c e p a y m e n t s , a n d o t h e r Government a n d p r i v a t e s e r v i c e s and i n v e s t m e n t income. Unilateral transfers are international t r a n s f e r s o f f u n d s f o r w h i c h t h e r e i s no q u i d p r o q u o . Examples of unilateral t r a n s f e r s include private g i f t s , pension payments, and Government g r a n t s . U n i l a t e r a l t r a n s f e r s a c c o u n t f o r o n l y a small p o r t i o n of c u r r e n t account t r a n s a c t i o n s i n t h e United S t a t e s . Although t h e merchandise t r a d e b a l a n c e h a s been i n d e f i c i t s i n c e 1 9 7 6 , i t s r a p i d d e t e r i o r a t i o n a f t e r 1982 h a s b e e n a t o p i c o f s i g n i f i c a n t concern and d e b a t e . The s e r v i c e s s u r p l u s , w h i c h i n t h e p a s t o f f s e t t h e m e r c h a n d i s e t r a d e b a l a n c e , began t o d e c l i n e i n 1982. The o v e r a l l r e s u l t is t h a t t h e c u r r e n t account d e f i c i t i s n e a r l y a s l a r g e a s t h e merchandise trade deficit. T a b l e 6 p r o v i d e s a c o m p r e h e n s i v e summary of m e r c h a n d i s e and s e r v i c e b a l a n c e s , u n i l a t e r a l t r a n s f e r s , and c u r r e n t a c c o u n t b a l a n c e s between 1970 and 1986. Forecasts Most f o r e c a s t s i n d i c a t e t h a t t h e m e r c h a n d i s e t r a d e d e f i c i t w i l l n a r r o w d u r i n g 1988. T a b l e 7 i n c l u d e s p u b l i s h e d f o r e c a s t s by Data R e s o u r c e s , I n c . ( D R I ) , Wharton E c o n o m e t r i c F o r e c a s t i n g A s s o c i a t e s , Morgan G u a r a n t y T r u s t Company of New York, a n d t h e O r g a n i s a t i o n f o r C o - o p e r a t i o n a n d Economic Development (OECD). The d a t a i n T a b l e 7 i s p r e s e n t e d o n a n a t i o n a l income a n d p r o d u c t a c c o u n t ( N I P A ) b a s i s , a n d on a c . i . f . b a s i s . The NIPA s t a t i s t i c s a r e p r o d u c e d by t h e D e p a r t m e n t o f C o n e r c e ' s B u r e a u of Economic A n a l y s i s a n d t r e a t t h e t r a d e b a l a n c e on a b a l a n c e - o f - p a y m e n t s (BOP) b a s i s . FOR ADDITIONAL READING U.S. L i b r a r y of Congress. Congressional Research Service. Exchange rates: The d o l l a r i n i n t e r n a t i o n a l m a r k e t s , by A r l e n e W i l s o n . [ W a s h i n g t o n ] 1987. ( U p d a t e d r e g u l a r l y ) CRS I s s u e B r i e f 78033 ----- A f a l l i n g d o l l a r and domestic [ W a s h i n g t o n ] J u l y 1 , 1986. CRS R e p o r t 86-127 inflation, by Craig ----- K. Elwell. Japan-U.S. economic r e l a t i o n s : Cooperation o r confrontation? W i l l i a m H. Cooper. [Washington] 1987. (Updated r e g u l a r l y ) CRS I s s u e B r i e f 8 7 1 5 8 . J a p a n 4 . S . t r a d e : An o v e r v i e w , by W i l l i a m H . F e b r u a r y 8 , 1988. 1 6 p. CRS R e p o r t 88-127 E Cooper. by [Washington] -- -- - T r a d e , by A r l e n e W i l s o n a n d G e o r g e H o l l i d a y . ( Updated r e g u l a r 1Y ) CRS I s s u e B r i e f 8 7 0 0 3 ----- The U.S. t r a d e d e f i c i t : C a u s e s , c o n s e q u e n c e s a n d c u r e s , by C r a i g K. E l w e l l and A l f r e d Reifman. [ W a s h i n g t o n ] J u l y 1 4 , 1986. 4 8 p. CRS R e p o r t 86-116 S ----- U.S. t r a d e and payments b a l a n c e s : Wilson. [ W a s h i n g t o n ] J a n . 2 3 , 1985. CRS R e p o r t 85-26 E ----- U n i t e d S t a t e s m e r c h a n d i s e t r a d e a n d t r a d e b a l a n c e s w i t h J a p a n , 19601 9 8 7 , by D a r i o Scuka. [ W a s h i n g t o n ] J a n . 25, 1988. 2 p. CRS R e p o r t 88-81 E ----- U n i t e d S t a t e s m e r c h a n d i s e t r a d e and t r a d e b a l a n c e s w i t h W. Germany, 1960-1987, by D a r i o S c u k a . [ W a s h i n g t o n ] Feb. 8 , 1988. 2 p. CRS R e p o r t 88-117 E [Washington] 1986. What do t h e y mean? 4 5 p. by A r l e n e TABLE 1 . Exports, General Imports, and Merchandise T r a d e B a l a n c e , January 1 9 8 6 - F e b r u a r y 1 9 8 8 a/ ($ m i l l i o n s ) Month Exports b/ f .a.s. va 1u e Genera 1 Imports c / c.i.f. v a l ue TradeBalance dl c.i.f customs imports import s . J a n . -Dec January February March Apri 1 Ma Y June J u 1y August September October November December . J a n . -Dec January February March Apri 1 May June July August September October November December J a n . -Feb. January February 51 b/ - 45,889.0 22,329.7 23,559.3 72,154.3 37,387.4 37,387.4 -26,265.3 -12,437.2 -13,828.1 -23,146.4 -10,888.0 -12,258.4 Merchandise T r a d e Balance (Census B a s i s ) . The f . a . s . method r e f e r s t o Exports a r e valued on t h e f.a.s. b a s i s . t h e t r a n s a c t i o n v a l u e a t t h e p o r t of e x p o r t a t i o n and g e n e r a l l y i n c l u d e s i n l a n d f r e i g h t , i n s u r a n c e , and o t h e r c h a r g e s i n c u r r e d i n p l a c i n g t h e goods a l o n g s i d e t h e c a r r i e r a t t h e p o r t o f e x p o r t a t i o n . c/ d_/ d -f / I m p o r t s a r e r e p o r t e d on two b a s e s : t h e Customs b a s i s ( i m p o r t s v a l u e d f o r p u r p o s e s of Customs a d m i n i s t r a t i o n ) and t h e c . i . f . b a s i s ( i m p o r t s a t Customs v a l u e p l u s t h e c o s t s of f r e i g h t , i n s u r a n c e , and o t h e r charges). Monthly c . i . f . import d a t a i s p r e s e n t e d i n t h e t a b l e ; m o n t h l y customs b a s i s i m p o r t s a r e n o t i n c l u d e d b u t may be c a l c u l a t e d by s u b t r a c t i n g f . a . s . e x p o r t s from t h e t r a d e b a l a n c e ( c u s t o m s b a s i s ) . The t r a d e b a l a n c e i s shown on t h e c . i . f . b a s i s and on t h e Customs basis. C.i.f. b a s i s i s a l w a y s h i g h e r t h a n Customs b e c a u s e of t h e a d d i t i o n a l c o s t s t h a t must be added t o t h e Customs v a l u e . F i g u r e s f o r 1986 a r e r e v i s e d s t a t i s t i c a l month d a t a ; a c t u a l month d a t a a r e s c h e d u l e d t o b e p u b l i s h e d d u r i n g t h e t h i r d q u a r t e r o f 1987. E f f e c t i v e w i t h t h e J u n e 1987 i s s u e of Report FT-900, t h e J a n u a r y t o December ( c a l e n d a r y e a r ) t o t a l e x p o r t s and t h e t r a d e b a l a n c e r e f l e c t a d j u s t m e n t s f o r undocumented e x p o r t s t o Canada. Data f o r i n d i v i d u a l months p r i o r t o J a n u a r y 1987 do n o t r e f l e c t s i m i l a r a d j u s t m e n t s and a r e t h e r e f o r e n o t d i r e c t l y comparable t o t h e m o n t h l y f i g u r e s f o r 1987. S o u r c e : Bureau of t h e Census. Summary o f U.S. E x p o r t and I m p o r t M e r c h a n d i s e T r a d e (FT-900), various issues; J o u r n a l of Commerce. Feb. 1 6 , 1988. TABLE 2 . U.S. M e r c h a n d i s e T r a d e B a l a n c e : Three-Month ($ b i l l i o n s ) Moving Average January February March Apr i 1 May June July August September October November December C a l c u l a t i o n s by CRS f r o m T a b l e 1 a b o v e . Monthly b a l a n c e s i n t h i s t a b l e e l i m i n a t e t h e peaks and v a l l e y s t y p i c a l of t h e u n a d j u s t e d m o n t h l y d a t a . The m o v i n g a v e r a g e i n d i c a t e s t r e n d s r a t h e r t h a n a c t u a l v a l u e s . The three-month moving a v e r a g e i s a n a v e r a g e c o m p r i s i n g t h e month i d e n t i f i e d i n t h e t a b l e , t h e p r e v i o u s m o n t h , a n d t h e f o l l o w i n g month. Thus, d a t a f o r November 1 9 8 7 i n c l u d e t h e a v e r a g e t r a d e b a l a n c e s f o r O c t o b e r , November, a n d December. December 1987 d a t a c a n n o t be c a l c u l a t e d u n t i l t h e J a n u a r y 1988 f i g u r e h a s been r e l e a s e d . D a t a f o r December 1 9 8 6 a n d J a n u a r y 1 9 8 7 c a n n o t b e c a l c u l a t e d b e c a u s e o f a change i n t h e method f o r d e t e r m i n i n g month1y b a l a n c e s . TABLE 3. Year U.S. E x p o r t s , I m p o r t s , a n d M e r c h a n d i s e Trade B a l a n c e , 1970-1987 ( c . i . f . basis) ($ m i l l i o n s ) Exports f.a.s. value Source: Bureau of T r a d e : December 1987. Census. Advance R e p o r t Month. R e p o r t FTgOOADV, Imports c.i.f. value Trade Balance c.i.f. basis t h e Census. Advance R e p o r t o n U.S. M e r c h a n d i s e R e p o r t FTgOOADV, Feb. 1 2 , 1 9 8 8 ; B u r e a u o f t h e on U.S. M e r c h a n d i s e T r a d e : J u n e 1987 S t a t i s t i c a l Aug. 1 4 , 1987. TABLE 4. Year Q u a r t e r l y M e r c h a n d i s e T r a d e Data i n Volume Terms, 1982-87 Exports billions percentage o f 1982 change* do1 Lars"* Imports b i l l i o n s percentage of 1982 change* dollars* Net E x p o r t s b i l l i o n s of 1982 d o l l a r s * * F i g u r e s e x p r e s s e d a t an a n n u a l r a t e . " " P e r c e n t a g e change o v e r p r e v i o u s p e r i o d . S o u r c e : Department a £ Commerce. Economic B u l l e t i n Board. National Income and P r o d u c t A c c o u n t s . REAL.GNP. Real S p e n d i n g and P r o d u c t i o n Flows. T a b l e 17. M e r c h a n d i s e T r a d e D e t a i l ( B i l l i o n s o f 1982 d o l l a r s ) (4.4). F e b r u a r y 1 , 1988. TABLE 5 . Merchandise Trade (~alance-of-Payments asi is) S e a s o n a l l y Adjusted ($ m i l l i o n s ) Quarterly U.S. Calendar Quarter Exports Imports Balance S o u r c e : U.S. Department o f Cormerce. Bureau o f Economic A n a l y s i s . S u r v e y o f Current B u s i n e s s , v a r i o u s i s s u e s . TABLE 6. Calendar year a_/ b/ c/ - d! B a l a n c e s on U.S. T r a d e , S e r v i c e s , U n i l a t e r a l T r a n s f e r s and C u r r e n t Account ($ billions) Merchandise trade b a l a n c e a/ Services b a l a n c e LL/ Net unilateral t r a n s f e r s c_/ Current account b a l a n c e d_/ On a balance-of-payments b a s i s . Includes travel, transportation, f e e s and r o y a l t i e s , insurance payments, o t h e r government and p r i v a t e s e r v i c e s , and i n v e s t m e n t income. I n t e r n a t i o n a l t r a n s f e r s of f u n d s , such a s p r i v a t e g i f t s , p e n s i o n payments and government g r a n t s f o r which t h e r e i s no q u i d p r o quo. The t r a d e b a l a n c e p l u s t h e s e r v i c e b a l a n c e p l u s n e t u n i l a t e r a l transfers, although conceptually equal t o t h e c u r r e n t account b a l a n c e , may d i f f e r s l i g h t l y a s a r e s u l t of r o u n d i n g e r r o r s . S o u r c e : U.S. various issues. Depart,ment of Commerce. Survey of Current Business, CRS- 15 TABLE 7. M e r c h a n d i s e T r a d e , 1985-1990: Forecasts ($ b i l l i o n s ) 1985 ACTUAL 1986 FORECAST 1988 1989 1987 1987 1990 Merchandise Trade E x p o r t s NIPA b a s i s 1_/ 219.6 220.2 n.a. I m p o r t s NIPA b a s i s 341.7 368.4 n.a. DR I WEFA OECD 407.8 402.0 407 DR I WEFA OECD -151.8 -167.1 -156 T r a d e B a l a n c e NIPA b a s i s -122.1 -148.2 n.a. T r a d e B a l a n c e CIF b a s i s -133.6 -156.2 11 -171.2 C u r r e n t Account -116.4 -141.4 n.a. -165.1 -156.1 -156 I Mc -167 (IMF 7 / -152.1 (DRI \WEFA IOECD 1 1 NIPA: N a t i o n a l Income and P r o d u c t Accounts. CIF: C o s t , i n s u r a n c e , f r e i g h t . DRI: Data R e s o u r c e s , I n c . 4_/ WEFA: WEFA Group. OECD: O r g a n i s a t i o n f o r Economic Co-operat i o n and Development. 6_/ MG: Morgan G u a r a n t y T r u s t Company of New York. 71 - IMF: I n t e r n a t i o n a l Monetary Fund. 2/ 21 52/ Sources: U.S. Department of Commerce. Bureau of Economic A n a l y s i s . Review Survey of Current Business. v a r i o u s i s s u e s ; Data R e s o u r c e s , I n c . U.S. F o r e c a s t of t h e U.S. Economy. J a n u a r y 1988; Data R e s o u r c e s , I n c . Summary. F e b r u a r y 1988; WEFA Group ( f o r m e r l y Wharton E c o n o m e t r i c s ) , U.S. Economic O u t l o o k , 1988-90. F e b r u a r y 1988; O r g a n i s a t i o n f o r Economic Co-opera t i on and Development and Development OECD Economic Out l o o k . December 1987; Morgan G u a r a n t y T r u s t Company of New York. World F i n a n c i a l Markets. ~ e p t e m b e r / O c t o b e r 1987; I n t e r n a t i o n a l Monetary Fund. World Economic O u t l o o k . O c t o b e r 1987. .