This morning the BEA released the data for 1st quarter current accounts. This is a more comprehensive look at our international transaction than the monthly trade figures. It includes income and other financial transactions as well.
I've done something different with the data. Below is the normal chart of intangibles (royalties and business services). But I've also broken down the data is a slightly different way. The second chart shows the elements of our current account. "Services" have been split into travel/transportation, business services and miscellaneous. Miscellaneous includes the services categories of "Transfers under U.S. military agency sales contracts" and "U.S. government miscellaneous services" and is combined with the financial category of "Unilateral transfers." Royalties are taken out of "services" and combined with income. It seems to me that royalty and license fees are no different than any other income on an investment.
The quarterly intangible trade data simply echoes the monthly date showing a general plateau. The reconfigured current account data tells an interesting story. Of course, it shows the massive change in goods trade due to the economic slowdown. But it also shows that most of the other categories are relatively flat (as can be seen better in the third chart). Income being somewhat volatile during this period as should be expected.
The current account data also shows the magnitude of the hole we are in. None of the other categories come close to making up for our goods deficit (even at the deep recessionary levels).
Clearly we won't be able to fix our international trade and financial situation without dealing with our goods deficit. That is part and parcel of the Intangible Economy.
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