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Analysis of the United States Balance of Payment

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Analysis of the United Sates Balance of Payment

The United States balance of payments measure and records all transactions between the United States and all other countries during a special period. The Balance of Payment illustrates the international growth of the United State economy, and can be a significant measure of economic development of the country.Each time a newly released balance-of-payments statistic can help policy makers to analyze and interpret the performance of the county's economy. An appropriate use of balance-of-payments strategy is helpful for understanding the developments in the international sector of the economy. This paper will analyze the United State's Balance of Payments in the period 2008 to 2010 in relation to previous years and will provide a vision based on research for period from 2011 to 2021.

The 2008-2010 United States Balance of Payment related to previous years

The United States since 1950 has an unfavorable balance of payments. In 1971 the in an effort to create more favorable balance of payments the United States dollar was devaluated, and the currency from fixed exchange rate system changed to floating exchange rate system. However, the balance of payment remains unfavorable because of the increased petroleum coast from Arab countries. In addition, in 1980s, the high deficit, and negative saving rates caused another decline of the balance of payments. As a result, the United States continued to borrow from foreigners to fill up the hole but the interest payments only increased the deficit in the balance of payments. In the late 1990s and 2000s, the U.S. balance of payments reached a record negative level. (www.bea.gov)

U.S. Balance of Payments, 2008 (www.bea.gov)

Current account balance −706, 068

Trade balance −840, 251

Services balance +144, 315

Goods and services balance −695, 936

Investment income balance +118, 231

Financial account balance +533, 965

Statistical discrepancy +200,055

In 2008, the United States balance of payment remained unfavorable, thus, the United States recorded a "current account deficit of $706 billion. (http://www.bea.gov) The current account deficit shows that the United States' import higher than its export. The import and export of goods and services called the merchandise trade balance. The United States reported in 2008 trade deficit of $840 billion. The next account, the service trade balances in 2008 shows a surplus of $144 billion, which means that the United States exports more services to the rest of the world than imports. The good and service trade deficit was $695 billion, and the investment income and financial account in 2008 shows a surplus. The surplus of investment income means that the U.S. earned more on their investments abroad than foreigners earned on their investments in the United States, while surplus of financial account means that the foreigners bought more U.S. assets than U.S. residents did. Finally, the U.S. statistical discrepancy in 2008 was a

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