US Trade Deficit – NIPA, Rest of the World
We have analysed the three components of BEAs National Income and Products Account – Consumer Spending, Investment Spending and Government Spending. The last component of GDP is the US trade deficit orÂ net exports, which as we know as exports-imports.
Exports are added to the GDP as they are goods produced domestically, and imports are subtracted as they are goods produced internationally but purchased domestically.
When the country’s exports are less than imports the country is said to have a trade deficit. The trade balance also includes services and invisibles such as freight, and insurance. The US runs a massive trade deficit with the rest of the world. We will see more about this component in the Trade Balance Report later.
Figure: US Trade Deficit – Goods and Services 2015 in $billions
Next we study the impact of the quarterly GDP release on financial instrument prices