GDP by the end of this year. Chart 2Net Foreign Assets (Percentages of GDP) Source: Survey of Current Business (SCB), Citibase.The 1999 U.S. Balance of Payments In 1999 the United States incurred a trade deficit in goods of $328.8 billion on a Census basis and $345.6 billion on a balance- of-payments basis (BoP). A surplus in services trade of $80.6 billion gave a deficit of $265.0 on goods and services (BoP) for the year. For September 2000, the trade deficit in goods increased to $40.2 billion from $36.7 billion in August. Overall U.S. trade deficits reflect a shortage of savings in the domestic economy and a reliance on capital imports to finance that shortfall. Financial, budgetary and other policies may affect the size of the trade deficit, while trade and capital flows affect the exchange value of the U.S. dollar. A large overall trade deficit may also indicate that certain U.S. industries are having difficulty competing with imports at home and in markets abroad. This may generate trade friction and pressures for the government to do more to open foreign markets, shield U.S. producers from foreign competition, or assist U.S. industries to become more competitive. Since 1976, the United States has incurred continual merchandise trade deficits. They increased dramatically from $36.5 billion in 1982 to a peak in 1987 at $159.6 billion. The deficit dropped to $74.1 billion in 1991 but rose to $345.6 billion in 1999 (BoP). Much of the improvement in the U.S. trade deficit between 1987 and 1991 resulted from a depreciation of the dollar and the recession in 1990-1991. The multilateral trade-weighted real value of the U.S. dollar reached a high in 1985, then dropped sharply from 1986 through 1988. However, the worsening of the deficit in 1993-95 can be attributed primarily to the faster recovery from recession in the United States than in Europe or Japan. In 1997-99, the Asian financial crisis caused a sizable fall in U.S. exports to A...
