Once again, BEA trade data shows a decline in the trade deficit, with the January deficit down $3.9 billion to $36.0 billion. That is the good news. As the Wall Street Journal reports:
The overall U.S. trade deficit was smaller than expected on Wall Street. Economists surveyed by Dow Jones Newswires estimated a $37.3 billion shortfall in January. The $36.03 billion gap was the lowest since $35.3 billion in October 2002.
The bad news is that both exports and imports declined - reflecting continued global economic weakness.
The other bad news is that the intangibles trade surplus declined ever so slightly in January as trade continues to slow. Both exports and imports were down for the month, but exports of intangibles dropped more than imports. Both private business services and royalties declined.
Our deficit in Advanced Technology Products also continued to decline, dropping to $1.967 billion in January. Both exports and import dropped in every area except biotechnology, where exports rose dramatically. 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.
The other news is the revisions to the data for the second half of 2008. The size of both exports and imports of both private business services and royalties were reduced. Exports had been overstated by as much as $1 billion and imports by around a half a billion dollars. Consequently, the intangible trade surpluses for the last few months had been overstated by roughly a half a billion dollars. The total intangibles surplus for had been overstated by roughly $3 billion.
Based on the revised data, exports increased by 7% over 2007 while imports were up 6%. The intangibles trade surplus was $147.0 billion in 2008, compared with $136.7 billion in 2007. Total trade in intangibles increased to $506.1 billion in 2008.
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.
Leave a comment