{
  "id": "RL31220",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL31220",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 101893,
      "date": "2003-04-30",
      "retrieved": "2016-04-08T14:46:44.316544",
      "title": "The Balance of Payments: Meaning and Significance",
      "summary": "This report provides a basic discussion of the U.S. balance of payments (BOP). The BOP is a\nsystematic accounting of the U.S.'s international transactions for a specified period of time. It is an\neconomic indicator that is followed closely by Members and Committees concerned with\ninternational trade and financial flows. The BOP measures flows between U.S. and non-U.S.\nresidents. Transactions involving items capable of directly satisfying economic needs and wants are\nrecorded in the BOP's current account. These are further distinguished as goods and services trade,\nreceipt or payment of income from investments, and one-way (unilateral) transfers. The capital and\nfinancial accounts capture transactions involving asset transfers (e.g., ownership transfer of equities\nbetween residents and non-residents).\n  The BOP is organized as a double-entry bookkeeping system. As a result, credits (i.e., inflows\nof funds) are, in principle, offset by debits (i.e., outflows of funds). However, difficulty in gathering\naccurate information creates a statistical discrepancy. To ensure credits and debits sum to zero the\nstatistical discrepancy is calculated as the sum of all BOP transactions with the opposite sign.\n  A key element of the BOP is the balance of trade (BOT). The BOT equals exports minus\nimports of goods and services. The BOT is used to quantify the trade deficit (i.e., imports exceeding\nexports). From the early 1990s until the third quarter of 2002 the U.S. trade deficit grew from less\nthan 1% of U.S. gross domestic product (GDP) to more than 4%. Because of the BOP's dual entry\nbookkeeping organization, the trade deficit must be offset by other transactions. Typically, a net\ninvestment inflow into the United States provides the bulk of the required offset. That is, in order\nto purchase U.S.-based assets foreign investors acquire the net outflow of dollars generated by the\ntrade deficit.\n  Many analysts believe the trade deficit is not sustainable and that the attractiveness of foreign\ninvestments will gain ground relative to U.S. investments. This will encourage domestic investors\nto send more investment funds out of the country while also encouraging foreign investors to send\nless to the United States. Both would make it more difficult to fund U.S. imports at current levels. \nTwo possible scenarios have been formulated to explain how the trade deficit might fall--soft and\nhard landings. With a soft landing the trade deficit gradually falls allowing exchange rates and other\neconomic measures to adjust; the adverse impact on the economy is thought to be minimal. A hard\nlanding, on the other hand, would entail a dramatic fall in the value of the dollar and insufficient\ntime for the economy to adjust. A recession may ensue.\n  The terrorists events of September 11 and the weakening economy had the potential to trigger\na hard landing, but the data do not indicate that this is happening. The exchange value of the dollar\nrelative to widely-traded currencies has steadily weakened since the beginning of 2002, but at the\nsame time its value has strengthened relative to less widely-traded currencies.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
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          "encoding": null,
          "url": "http://www.crs.gov/Reports/pdf/RL31220",
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      "topics": []
    }
  ],
  "topics": [
    "Economic Policy",
    "Foreign Affairs"
  ]
}