Archive for June, 2012

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New Study Provides Profile of U.S. Firms that Export and Import Services

Published June 21, 2012 BEA News , International , Trade Deficit , Trade in Goods and Services Leave a Comment
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Chart of trading partnersData from the Bureau of Economic Analysis (BEA) show that the United States has historically maintained a trade surplus in private services.  So what types of firms are involved in this kind of trade abroad?  Thanks to a new BEA study we have a better understanding of the kinds of American companies that export and import services.

Here are some of the key findings:

• Firms in industries typically associated with the production or sales of manufactured goods are significant services traders, accounting for more than 25 percent of exports and imports covered by the study.  Trade in services by manufacturers largely consists of transactions related to the use or creation of intellectual property, the provision of headquarters’ management and support services, or the allocation of expenses.

• Multinational companies, especially U.S. parent companies, are important services traders, accounting for more than 80 percent of trade in services with both affiliated (their own foreign branches) and unaffiliated parties.  U.S. parents tend to have larger transactions, trade with more countries, and trade more service types as compared to U.S. affiliates of foreign parents and non-multinationals.Chart of services types traded

• Business, professional, and technical services, especially research and development, testing services, and management and consulting services, accounted for more than one third of trade by both U.S. parents and U.S. affiliates.

• Many small firms engage in services trade, but large firms dominate the value of trade.

• The trade in services of multinational companies is dominated by transactions with their affiliated parties.  This is especially true for business, professional, and technical services, and royalties and license fees.  Financial services trade, such as brokerage and advisory and management services, is primarily with unaffiliated parties.  Those findings are based on a new data set that combines data from surveys on cross-border trade in services with data on the operations of multinational companies.

In 2008, trade in services included in the study—financial services; insurance; royalties and license fees; telecommunications; and business, professional, and technical services (excluding medical services)—totaled $302.3 billion in exports and $195.6 billion in imports, resulting in a surplus on trade of $106.7 billion.  These services accounted for more than half of total private services exports and imports, and nearly three-quarters of the $148.3 billion U.S. surplus on private services trade in 2008. To learn more about the characteristics of U.S. exporters and importers of services, read the full article.

Travel and Tourism Spending Increases

Published June 20, 2012 BEA News , GDP by Industry , Industry , Travel and Tourism Leave a Comment

Inflation-adjusted spending on travel and tourism increased at an annual rate of 3.4 percent in the first three months of this year, the Bureau of Economic Analysis (BEA) reports. It had increased at a rate of 4.4 percent in the fourth quarter of 2011.  The slightly slower pace in the first quarter mostly reflected less spending on air travel and on lodging.

Still, travel and tourism spending has grown faster than the U.S. economy in both of the last two quarters. Gross domestic product rose 1.9 percent in the first quarter and 3.0 percent in the fourth quarter.Tourism spending

Meanwhile, overall growth in prices for travel and tourism goods and services turned up, increasing at a pace of 6.0 percent in the first quarter. That followed a 1.7 percent annualized decline in the fourth quarter. The upturn reflected higher prices for fuel and lodging.

Total travel and tourism employment increased at a 2.7 percent annualized pace to 7.6 million jobs in the first quarter. That followed a 1.3 percent growth rate in the final three months of last year. By comparison, overall U.S. employment increased 2.1 percent in the first quarter, after rising 1.4 percent in the fourth quarter of last year.

Of the total 7.6 million travel and tourism jobs at the start of this year,  5.4 million jobs involved producing goods and services sold “directly” to visitors such as hotel workers, airline pilots and souvenir sellers. Another 2.2 million jobs involved people “indirectly” employed, like those who make toiletries for hotel guests and the plastic used to produce souvenir key chains.

Spending on air transportation slowed, increasing 1.8 percent in the first quarter, after registering a 3.2 percent growth rate in the fourth quarter. Spending on lodging also slowed, increasing at a 4.8 percent pace in the first quarter, following a 7.4 percent growth rate in the fourth quarter. Business spending on lodging increased while leisure spending was flat.

Prices for passenger air transportation accelerated, rising at an 11.9 percent rate in the first quarter after increasing at a 6.5 percent pace in the fourth quarter. Airlines continued to increase fares in the first quarter to cover rising fuel costs. Prices for lodging also turned up, increasing 6.3 percent in the first quarter after falling at an 8.3 percent pace in the fourth quarter. To learn more about travel and tourism spending read the full report.

What is the Value of Household Work?

Published June 11, 2012 BEA News , National Leave a Comment
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The Nobel Prize winner Simon Kuznets presented an original set of estimates to Congress in 1934 that contained a number of caveats about what was omitted from the calculation of national income (and later from the calculation of gross domestic product) that made it an imperfect measure of welfare. One of the principal omissions that he cited was the “services of housewives and other members of the family.” Although the hours men contribute to “household production” have risen, while those of women have declined, it is still true that the exclusion of household production—of men or women—causes a significant understatement in the level of domestic production. Turns out, Mr. Kuznets was correct. New research by the Bureau of Economic Analysis has found that if the value of household production were included in gross domestic product (GDP), it would add approximately $3.8 trillion to the U.S. economy in 2010.

A research paper published in the May issue of the Survey of Current Business found that if “home production”—the value of the time spent cooking, cleaning, watching the kids, and so forth—were counted, it would raise the level of nominal GDP nearly 26 percent in 2010. Back in 1965, when fewer women were in the formal labor force and more were working in the nonmarket sector, GDP would have been raised by 39 percent. Because the inclusion of “home production” would add more to the level of GDP in 1965 than in 2010, factoring in the value of these nonmarket activities was found to reduce the average annual growth rate of GDP over this period.

The paper also found that in 1965, men and women spent an average of 27 hours a week involved in “home production” activities, such as housework, cooking, odds jobs, gardening, shopping, child care, and domestic travel. By 2010, they spent 22 hours a week on such activities.

The overall decline in hours occurred as the amount of time women spent on household activities fell to 26 hours a week in 2010, from 40 hours in 1965, as more and more women took jobs outside the home. While women’s hours have dramatically dropped over that period, men’s hours dedicated to household activities rose slightly to 17 hours a week, from 14, over that same period.

Interestingly, the 2007—2009 recession had little impact on the number of hours U.S. households spent on cooking, cleaning, and other home activities, despite the fact that the number of unemployed people increased during that time.

The paper also found that accounting for household production reduces income inequality because the amount of household production is fairly constant across all households. Since there is little difference in time spent on household activities between lower and higher income households, the effect of accounting for household production is that it raises the incomes of low-income households proportionally more than high-income households.

To learn more, read the full paper called “Accounting for Household Production in the National Accounts, 1965–2010.”

April Trade Gap is $50.1 Billion

Published June 8, 2012 BEA News , International , Trade Deficit , Trade in Goods and Services Leave a Comment
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The U.S. monthly international trade deficit decreased in April 2012, according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $52.6 billion (revised) in March to $50.1 billion in April, as imports decreased more than exports. The previously published March deficit was $51.8 billion. The goods deficit decreased $2.7 billion from March to $64.8 billion in April, and the services surplus decreased $0.1 billion to $14.8 billion.

Exports of goods and services decreased $1.5 billion in April to $182.9 billion, mostly reflecting a decrease in exports of goods. Exports of services also decreased.

The decrease in exports of goods was more than accounted for by decreases in capital goods and industrial supplies and materials.

The decrease in exports of services was more than accounted for by a decrease in other private services (which includes items such as business, professional, and technical services; insurance services; and financial services). Changes in the other categories of services exports were small.

Imports of goods and services decreased $4.1 billion in April to $233.0 billion, reflecting a decrease in imports of goods. Imports of services increased.

The decrease in imports of goods resulted from decreases in all major categories. The largest decreases were in capital goods and industrial supplies and materials.

The increase in imports of services was more than accounted for by an increase in other private services.

Changes in the other categories of services imports were small.

Goods by geographic area (not seasonally adjusted)
The goods deficit with Canada increased from $3.0 billion in March to $3.3 billion in April. Exports decreased $1.9 billion to $24.4 billion, while imports decreased $1.5 billion to $27.7 billion.

The goods deficit with China increased from $21.7 billion in March to $24.6 billion in April. Exports decreased $1.4 billion to $8.5 billion, while imports increased $1.5 billion to $33.0 billion.

The goods deficit with Japan decreased from $7.1 billion in March to $6.3 billion in April. Exports decreased $0.4 billion to $5.8 billion, while imports decreased $1.2 billion to $12.1 billion.

To learn more about U.S. international trade in goods and services, read the full report.

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