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April 10, 2008
February trade in intangibles
The US trade deficit jumped in February, according to this morning’s BEA trade data. The overall deficit rose by $3.3 billion to $62.3 billion from January's revised $59 billion. The increase came as a shock. As the Wall Street Journal noted, “Economists surveyed by Dow Jones Newswires, expecting the gap to shrink, had estimated a $57.10 billion shortfall.” The increase was due to imports rising faster than exports. On a positive note, both the volume and cost of crude oil imports declined.
The other bad news was that our intangible trade balance also slipped slightly in February, with our monthly surplus declining by $37 million. Exports of business services actually declined, contributing to the slippage. With imports of business services increasing, the surplus in business services trade declined by $89 million. For royalties, exports increased more than imports with the royalties’ surplus growing by $52 million.
Note: our intangibles surplus covers approximately 45% of our consumer goods deficit.
The deficit in Advanced Technology Products improved slightly in February by $140 million to $3.34 billion. Imports declined and exports grew slightly. The last monthly surplus in Advanced Technology Products was in June 2002 and the last sustained series of monthly surpluses were in the first half of 2001.
Note: we define trade in intangibles as the sum of "royalties and license fees" and "other private services". The BEA/Census Bureau definitions of those categories are as follows:
Royalties and License Fees - Transactions with foreign residents involving intangible assets and proprietary rights, such as the use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, and manufacturing rights. The term "royalties" generally refers to payments for the utilization of copyrights or trademarks, and the term "license fees" generally refers to payments for the use of patents or industrial processes.
Other Private Services - Transactions with affiliated foreigners, for which no identification by type is available, and of transactions with unaffiliated foreigners. (The term "affiliated" refers to a direct investment relationship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise's voting securities or the equivalent, or when a foreign person has a similar interest in a U.S. enterprise.) Transactions with unaffiliated foreigners consist of education services; financial services (includes commissions and other transactions fees associated with the purchase and sale of securities and noninterest income of banks, and excludes investment income); insurance services; telecommunications services (includes transmission services and value-added services); and business, professional, and technical services. Included in the last group are advertising services; computer and data processing services; database and other information services; research, development, and testing services; management, consulting, and public relations services; legal services; construction, engineering, architectural, and mining services; industrial engineering services; installation, maintenance, and repair of equipment; and other services, including medical services and film and tape rentals.
Posted by Ken Jarboe at April 10, 2008 10:11 AM