The Bureau of Economic Analysis or BEA is a US government ag

The Bureau of Economic Analysis, or BEA, is a U.S. government agency that collects a wide variety of statistics about the U.S. economy. From the BEAs home page (http://www.bea.gov) find data for the most recent year available on U.S. exports and imports of goods and services. (look at the annual data in an Excel file with monthly and annual data under U.S. economic accounts/International/Trade in goods and services). Is the United States running a trade surplus or deficit? Explain. How did the trade balance change from 2008 to 2009? Explain.

Solution

Q1:- Is the United States running a trade Surplus or deficit?

Ans:- United States running trade deficit since 1976 due to high imports of oil and consumer products . If you see the U.S trade in Good & service annual data then you can get a better idea on the trade deficit.

Actually three situation are possible in balance of trade

NX= Balance of Trade

X= Export

M= Import

First:- If X>M we have a Trade Surplus

      Example:- Balance Trade or Net Export (NX) = X-M= 200 (in billions Dollors ) - 100 (in Billions Dollors ) = 100 (in Billion Dollors)

Second:- If X<M we have a Trade Deficit

Example:- Balance Trade or Net Export (NX) = X-M= 100 (in billions Dollors ) - 200 (in Billions Dollors ) = -100 (in Billion Dollors)

Third:- If X=M We have a Balance Trade

Example:- Balance Trade or Net Export (NX) = X-M= 200 (in billions Dollors ) - 200 (in Billions Dollors ) = 0 (in Billion Dollors)

This is Important part we have to understand.

Q2:- How did Trade Balance change from 2008 to 2009? Explain

Ans:- Year 2007 to 2009 is the year of Global financial crisis & the U.S recession. The financial crisis & U.S recession casued U.S imports to drop faster than U.S exports . because of that U.S trade deficit decrease or lesser than any previous year . In the data table also shows that the year 2008 U.S trade deficit was -708,726 Million Dollors but in the year 2009 it was -383,774 Million Dollors. It shows that the global financial crisis & U.S recession influenced the balance of trade.