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US goods exports small compared to imports, but not in services
THE United States last ran a trade surplus in 1975, and there are few signs that it anytime soon, says Bloomberg News.
But the situation is different in the area of services, which while still smaller than the deficit in goods, has been gaining in the last 15 years.
The US brings in much more income from overseas investments than foreigners get in the US - $201.5 billion more in 2015, compared with a services trade surplus of $219.6 billion.
Almost all of this surplus comes from direct investments by corporations (as opposed to portfolio investments by money managers).
US corporations get paid for the use of their brands, technology and capital-allocation skills.
These surpluses from services and investment reduce the hole dug by the goods-trade deficit, but there's still a big gap between what the US is paid and what it pays out - a 2015 current-account deficit of $484.1 billion, or 2.7 per cent of gross domestic product, says the Bureau of Economic Analysis.
To fill that, the US has to import capital from overseas. Depending on your inclination, you can see this as Americans borrowing from foreigners to finance an insatiable spending habit, or foreigners investing in American potential.
The major categories of intellectual property for which US entities charge for are industrial processes, computer software, trademarks and franchise fees, and audio-visual and related products.
Trademarks and franchise fees cover some of the high-speed pizza delivery. Music, movies and other entertainment fall under audio-visual and related products, and computer software is self-explanatory.
The big money coming in from intellectual property, financial services and travel helps explain certain political priorities.
US trade negotiators, for example, were criticised for being overly protective of copyrights and of Wall Street in the Trans-Pacific Partnership agreement.
Strong copyrights and loose financial regulations have their downsides, but they do probably help increase net services exports - and net investment income as well.
Then there's travel. Foreigners spend a lot more money visiting the US for business, education and pleasure than Americans spend travelling overseas.
The notoriously slow and unpleasant entry process for foreigners at US airports stands in the way of this money flow.
But the situation is different in the area of services, which while still smaller than the deficit in goods, has been gaining in the last 15 years.
The US brings in much more income from overseas investments than foreigners get in the US - $201.5 billion more in 2015, compared with a services trade surplus of $219.6 billion.
Almost all of this surplus comes from direct investments by corporations (as opposed to portfolio investments by money managers).
US corporations get paid for the use of their brands, technology and capital-allocation skills.
These surpluses from services and investment reduce the hole dug by the goods-trade deficit, but there's still a big gap between what the US is paid and what it pays out - a 2015 current-account deficit of $484.1 billion, or 2.7 per cent of gross domestic product, says the Bureau of Economic Analysis.
To fill that, the US has to import capital from overseas. Depending on your inclination, you can see this as Americans borrowing from foreigners to finance an insatiable spending habit, or foreigners investing in American potential.
The major categories of intellectual property for which US entities charge for are industrial processes, computer software, trademarks and franchise fees, and audio-visual and related products.
Trademarks and franchise fees cover some of the high-speed pizza delivery. Music, movies and other entertainment fall under audio-visual and related products, and computer software is self-explanatory.
The big money coming in from intellectual property, financial services and travel helps explain certain political priorities.
US trade negotiators, for example, were criticised for being overly protective of copyrights and of Wall Street in the Trans-Pacific Partnership agreement.
Strong copyrights and loose financial regulations have their downsides, but they do probably help increase net services exports - and net investment income as well.
Then there's travel. Foreigners spend a lot more money visiting the US for business, education and pleasure than Americans spend travelling overseas.
The notoriously slow and unpleasant entry process for foreigners at US airports stands in the way of this money flow.
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