By Ryan Barnes
|Release Date:||International Trade - around the 19th of the month|
|Release Time:||International Trade - 8:30am Eastern Standard Time|
|Coverage:||International Trade - two months prior|
|Released By:||Bureau of Economic Analysis (BEA)|
Investors and policymakers are increasingly using trade balances and information as a way to determine the health of the
There are several different aggregate measures of trade balance that are recorded and presented in the media, but the one that is most cited will be the current account,a measure of the net of physical goods trade, services trade, investment income and unilateral transfers. A more detailed breakdown of the financial receipts between the U.S. and abroad is available quarterly, summarizing the monthly data and reporting adjustments as needed; it is also released by the Bureau of Economic Analysis (BEA). (To learn more, read Understanding The Current Account In The Balance Of Payments and Current Account Deficits.)
What it Means for Investors
The consensus is that the trade deficit must be balanced out by an equal dollar amount of foreign investment in
The current account as a percentage of total gross domestic product (GDP) is an important metric because it shows how large the current account number is in relation to overall output in the economy.
The Trade Balances Report can move the markets upon release if the data shows a marked change from the prior period. Compared to other indicators, this report is relatively hard to estimate outside of petroleum, so some surprise factors can occur from time to time. Most investors want to see the trade balance maintain current levels or fall, as it is a sign that exports are rising, and the companies who export are increasing sales in those areas of the world.
- Monthly releases are concise and give results in nominal (dollar) terms.
- Highlights which countries make up the largest percentages of the balance, as well as rates of change
- Results shown against the backdrop of the past six months
- Trade represents approximately 25% of total economic activity and is a large component of GDP.
- Monthly report doesn't show a complete transaction reconciliation (quarterly release does).
- Inconclusive as to the long-term effects of the stock market and economy of a trade deficit or surplus.
- Volatile due to oil prices and seasonality
The Trade Balance Report can give valuable clues to future swings in
TradingThese five reports provide short- and long-term insight into the valuation of the U.S. dollar.
InvestingThe balance of trade is the difference between the value of all the goods and services a country exports and the goods and services it imports.
InvestingThe current account reflects the difference between a country’s savings and investments.
InsightsLearn how a country's current account balance reflects the country's economic health.
InsightsInvestors can learn a lot, or very little, from these indicators once they know how to use them.
InsightsIs a trade deficit, also known as a current account deficit, beneficial or detrimental to a country's economy?
InsightsThe balance of trade is the difference between a country’s imports and exports. A trade deficit occurs when a country buys or imports more goods from other countries than it sells or exports. ...
InsightsThe U.S. has been running both fiscal and current account deficits for years, but what does it all add up to?
InsightsA current account deficit occurs when a country spends more money on the goods and services it imports than it receives for the goods and services it exports.
InsightsThe United States' trade deficit is historically large, the biggest in the world. With luck, it'll get even larger.