Trade balances effects upon their nation's GDPs.

[Supposn]

...a "new" creditable formula for calculating nations' GDPs? ...

fwiw from here, more info here or here):

1) The Expenditure Approach

This method of determining GDP adds up the market value of all domestic expenditures made on final goods and services in a single year, including consumption expenditures, investment expenditures, government expenditures, and net exports. Add all of the expenditures together and you determine GDP.

2) The Production Approach

This method also called the Net Product or Value added method requires three stages of analysis. First gross value of output from all sectors is estimated. Then, intermediate consumption such as cost of materials, supplies and services used in production final output is derived. Then gross output is reduced by intermediate consumption to develop net production.

3) The Income Approach

This method of determining GDP is to add up all the income earned by households and firms in the year. The total expenditures on all of the final goods and services are also income received as wages, profits, rents, and interest income. By adding together all of the wages, profits, rents, and interest income, you determine GDP:

The three methods of measuring GDP should result in the same number...​

Expan_Panama, I’ve been aware that there are other methods for calculating USA’s GDP but the expenditure method is the one that’s conventionally used by creditable statisticians and economists throughout the world within governments, universities, and professional publications.

The other methods provide results similar to the expenditure method which would not occur if the results of the other methods didn’t reflect trade balances similar effects within the calculation of their nation’s GDP.

When creditable statisticians or economists have employed other than the expenditure method to calculate GDP, it’s noteworthy for them to mention it. It’s the only method used for all official purposes within the U.S. and I suppose most other governments. I suppose that includes all USA state governments and all or almost all national governments.

Respectfully, Supposn

 

[Toddsterpatriot]

Expat_Panama, if a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.

[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].

Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline. Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.

Regardless of a nation’s annual GDP, it was affected by its balance of trade. A positive trade balance increased it or a negative balance reduced it.

Respectfully, Supposn

Expat_Panama, if a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year.

Exactly! If we immediately stopped all imports of oil, our GDP and jobs would increase.

Wait, what?

DERP!

 

[danielpalos]

Bottom line is that the bigger the 'trade deficit' the better we get at creating assets like new hotels..

ideally, but in reality the more lazy and socialist America gets the
less likely we will be competitive making hotels and other stuff. The only real solution is to get tough lean and competitive.

our drug war is pure, "bloatware".

 

[danielpalos]

Excerpted from Wikipedia’s “Balance of Trade” article:

“Trade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDP”. …
… Refer to:

“Expenditure Method
http://www.bea.gov/methodologies/index.htm#national_meth
http://www.britannica.com/topic/gross-domestic-product”.

///////////////////////////////////////////////////////////////////////////////////////////////////////////

If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.

[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].

Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline. Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.

Regardless of a nation’s annual GDP, a positive trade balance increased it or a negative balance reduced it.

There are some production supporting goods and service products that are not fully reflected within the prices of final products because their entire costs were not passed on to the final producers; (for example, government provided infrastructure, reduced utility rates, government or university research and development may be provided to producers at less than their actual costs, although they all contribute to the producing nations’ GDPs.)

If entire production support is not reflected within nations’ globally traded goods’ prices, those nations’ trade balances are understated and trade deficit’s reductions or trade surpluses contributions to their nation’s GDPs are similarly understated.

Nations attract investment due primarily to expectations of investments’ security and rates of return rather than by the nation’s trade volumes or trade balances.

Respectfully, Supposn

It's not rocket science.

Exporting creates jobs.

Importing kills jobs.

There you have it -- 6 words -- 2 sentences.

depends on the goods being imported and the finishing process.

 

[danielpalos]

Not necessarily, depends on what you're importing. The US needs many raw materials from other countries that frankly we don't have. The other thing is this, and liberals absolutely hate this: if a foreign country can make and ship a product that is cheaper than what we can make it for here then that is a net positive for our economy. Why? Because then the American consumer has more money to spend on more stuff. So maybe the workers that make the higher priced product lose jobs but that loss is made up by more workers in some other industry or sector that grows because of increased demand.

Look at Japan - they've been running a trade surplus for decades, but their economy sucks.

Task0778, we’re not discussing individual transactions, we’re discussing USA’s annual balances of trade. USA’s annual trade deficits are not due to our importing products to support USA’s productions.

Annual trade deficits are always of net detriment to their nation’s GDPs and numbers of jobs. We all benefit from cheaper products but that doesn’t compensate for trade deficits net detrimental effects upon the purchasing powers of USA’s wage earning families.

You’re incorrect when you state “So maybe the workers that make the higher priced product lose jobs but that loss is made up by more workers in some other industry or sector that grows because of increased demand”.

Annual trade deficits are ALWAYS net detrimental to their nation’s GDPs and numbers of jobs.

Regarding Japan, their economy would be much poorer if they were to suffer annual trade deficits. They and many other nations’ economies benefit from maintaining annual trade surpluses.

Respectfully, Supposn

We can't be good at everything; and, we can't renegotiate what we are good at, merely by free trade agreement. I believe we need to improve our infrastructure to improve our trade position.

 

[danielpalos]

Economic theory dictates that a trade deficit is not necessarily a bad situation because it often corrects itself over time. However, a deficit has been reported and growing in the United States for the past few decades, which has some economists worried. This means that large amounts of the U.S. dollar are being held by foreign nations, which may decide to sell at any time. A large increase in dollar sales can drive the value of the currency down, making it more costly to purchase imports.

Read more: Trade Deficit Definition | Investopedia Trade Deficit
Follow us: Investopedia on Facebook

Why is the right wing worried; Hooverville for Trade!

 

[task0778]

Supposn, I broke it down into separate parts for ease of Discussion. More to come.

Task0778:
A large part of our trade deficits for many years has been the importing of oil, which obviously supports the USA's production.

Supposn:
Task0778, I sit corrected because I type sitting down. You’re correct, for a number of years petroleum products were more significant net contributors to USA’s annual trade deficits for a number of years. (But much of USA’s gasoline consumption does not support USA’s production).
Task: Might have to argue that most of us use gasoline to get to work, which does support production.
Supposn: [I’m among the proponents of the trade policy described by Wikipedia’s “Import Certificates” article. The proposal’s not applicable to the values of scarce or precious mineral materials integral to goods passing through USA’s borders. It’s expected that congress would designate crude oil within their list of such materials.]
Task: Import certificates sounds like another way of saying quotas, which is another form of protectionism that I oppose. There are some countries for whom we absolutely need their raw materials or cheap labor or whatever to make our finished products competitively priced. I think it's a bad idea.

 

[Supposn]

Excerpted from Wikipedia’s “Balance of Trade” article:

“Trade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDP”. …
… Refer to:

“Expenditure Method
http://www.bea.gov/methodologies/index.htm#national_meth
http://www.britannica.com/topic/gross-domestic-product”.

///////////////////////////////////////////////////////////////////////////////////////////////////////////

If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.

[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].

Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline. Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.

Regardless of a nation’s annual GDP, a positive trade balance increased it or a negative balance reduced it.

There are some production supporting goods and service products that are not fully reflected within the prices of final products because their entire costs were not passed on to the final producers; (for example, government provided infrastructure, reduced utility rates, government or university research and development may be provided to producers at less than their actual costs, although they all contribute to the producing nations’ GDPs.)

If entire production support is not reflected within nations’ globally traded goods’ prices, those nations’ trade balances are understated and trade deficit’s reductions or trade surpluses contributions to their nation’s GDPs are similarly understated.

Nations attract investment due primarily to expectations of investments’ security and rates of return rather than by the nation’s trade volumes or trade balances.

Respectfully, Supposn

depends on the goods being imported and the finishing process.

DanielPalos, no; a nation’s global trade policy is not a matter of reviewing and modifying policy to best fit each individual transaction. It’s a general policy applied to all items of the nation’s annual international trade transactions.

Respectfully, Supposn

 

[expat_panama]

Economic theory dictates that a trade deficit is not necessarily a bad situation because it often corrects itself over time. However, a deficit has been reported and growing in the United States for the past few decades, which has some economists worried. This means that large amounts of the U.S. dollar are being held by foreign nations, which may decide to sell at any time. A large increase in dollar sales can drive the value of the currency down, making it more costly to purchase imports.

Read more: Trade Deficit Definition | Investopedia Trade Deficit
Follow us: Investopedia on Facebook

Why is the right wing worried; Hooverville for Trade!

It may not be the 'right wing' that's gone protectionist. Somehow all this talk about massive tax hikes on imports, state control of consumer spending, like how is all this supposed to be something we'd call 'conservative'?

 

[task0778]

Supposn:
The difference is who win and who loses. USA GDP has not been decreased because production has relocated across USA state lines; if some USA labor has been displaced, other USA labor is doing the job.
When USA GDP is reduced (as it is reduced more than otherwise due to our annual trade deficits), there are lesser numbers of jobs than otherwise and lesser jobs drags upon the nation’s median wage.

Task0778:
This is ridiculous. What are you saying, if only they could run a larger surplus they'd be good to go? You tell me, how big a surplus do they need to reach, and why has their economy sucked for at least the last 30 years while they've had the trade surplus?

Supposn:
It’s not stated that balance of trade determines their nation’s GDP, but rather that it’s among the factors affecting their nation’s GDP. Due to trade surpluses. their nation’s annual GDPs are greater (THAN OTHERWISE; due to trade deficits, their nation’s annual GDPs are less (THAN OTHERWISE).

Task:
The conventional rhetoric is that trade deficits subtract from GDP and therefore must result in lost jobs. But this argument is entirely inconsistent with actual experience of the U.S. economy.
Thanks in part to the Smoot-Hawley Tariff Act of 1930, the United States ran large trade surpluses from 1930 to 1935 and again from 1937 through 1941, while unemployment frequently exceeded 25 percent. Fewer imports did not bring economic success.
In contrast, beginning in 1975, the United States began running trade deficits every year. During those four decades, the U.S. economy tripled in real terms and the number of jobs in the economy more than doubled.
For the last 40 years, an increasing trade deficit has correlated with lower rates of unemployment. Faster economic growth increases demand for both labor and material inputs (domestically-produced as well as imported inputs). Growth in demand pushes up the trade deficit while it pushes down unemployment.

 

[task0778]

Task0778:
Totally wrong. A trade deficit does negatively impact the GDP number, but it does not necessarily impact the number of jobs.

Supposn:
Please further explain this statement.

Task0778:
I'm pretty sure the positive effects of an increased purchasing power resulting from increased competition due to cheaper foreign products is an absolute boon to every US family cuz their dollars go a lot further. Especially the families at or below the poverty level.

Supposn:
How does reducing USA’s GDP more than otherwise, thus reducing USA’s numbers of jobs more than otherwise improve the financial condition of USA’s wage earning families more than otherwise?

Task:
A reduction in GDP (also known as a recession or depression) obviously results in a loss of jobs because consumption and investment both decline. BUT, recessions and depressions clearly do not occur due to trade deficits, otherwise the US would've been in serious trouble over the past 40 some years when trade deficits blew up. Why? Because a TD does not necessarily translate to less consumption and less investment.

 

[danielpalos]

Excerpted from Wikipedia’s “Balance of Trade” article:

“Trade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDP”. …
… Refer to:

“Expenditure Method
http://www.bea.gov/methodologies/index.htm#national_meth
http://www.britannica.com/topic/gross-domestic-product”.

///////////////////////////////////////////////////////////////////////////////////////////////////////////

If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.

[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].

Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline. Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.

Regardless of a nation’s annual GDP, a positive trade balance increased it or a negative balance reduced it.

There are some production supporting goods and service products that are not fully reflected within the prices of final products because their entire costs were not passed on to the final producers; (for example, government provided infrastructure, reduced utility rates, government or university research and development may be provided to producers at less than their actual costs, although they all contribute to the producing nations’ GDPs.)

If entire production support is not reflected within nations’ globally traded goods’ prices, those nations’ trade balances are understated and trade deficit’s reductions or trade surpluses contributions to their nation’s GDPs are similarly understated.

Nations attract investment due primarily to expectations of investments’ security and rates of return rather than by the nation’s trade volumes or trade balances.

Respectfully, Supposn

depends on the goods being imported and the finishing process.

DanielPalos, no; a nation’s global trade policy is not a matter of reviewing and modifying policy to best fit each individual transaction. It’s a general policy applied to all items of the nation’s annual international trade transactions.

Respectfully, Supposn

better products at lower cost, always increase market share and trade balance.

 

[danielpalos]

Economic theory dictates that a trade deficit is not necessarily a bad situation because it often corrects itself over time. However, a deficit has been reported and growing in the United States for the past few decades, which has some economists worried. This means that large amounts of the U.S. dollar are being held by foreign nations, which may decide to sell at any time. A large increase in dollar sales can drive the value of the currency down, making it more costly to purchase imports.

Read more: Trade Deficit Definition | Investopedia Trade Deficit
Follow us: Investopedia on Facebook

Why is the right wing worried; Hooverville for Trade!

It may not be the 'right wing' that's gone protectionist. Somehow all this talk about massive tax hikes on imports, state control of consumer spending, like how is all this supposed to be something we'd call 'conservative'?

Laissez-fair trade policy!

 

[danielpalos]

Only socialists want to nationalize trade policy.

 

[Supposn]

stupid and simplistic since you cant export without importing an equal amount

EdwardBaiamonte, their are no nations with annual global trade surpluses?
Respectfully, Supposn

 

[EdwardBaiamonte]

stupid and simplistic since you cant export without importing an equal amount

EdwardBaiamonte, their are no nations with annual global trade surpluses?
Respectfully, Supposn

Correct,in the absence of stupid liberal government policies exports must equal imports

 

[Toddsterpatriot]

The US Dollar is the reserve currency of the world.
How are foreign governments and investors supposed to get their hands on dollars?

 

[Supposn]

stupid and simplistic since you cant export without importing an equal amount

EdwardBaiamonte, their are no nations with annual global trade surpluses?
Respectfully, Supposn

Correct,in the absence of stupid liberal government policies exports must equal imports

Edward Baiamonte, refer to s://en.wikipedia.org/wiki/List_of_countries_by_current_account_balance
This is a list of the 20 nations with the highest trade surpluses.

You can also link to:
nations' trade balances - Google Search

I hope you’re just ignorant rather than stupid and ignorant. Information cures ignorance but some people remain stupid their entire lives. It’s stupid to deny existence of nations’ annual global trade surpluses without at least doing a google search.

Supposn

 

[danielpalos]

stupid and simplistic since you cant export without importing an equal amount

EdwardBaiamonte, their are no nations with annual global trade surpluses?
Respectfully, Supposn

Correct,in the absence of stupid liberal government policies exports must equal imports

Edward Baiamonte, refer to s://en.wikipedia.org/wiki/List_of_countries_by_current_account_balance
This is a list of the 20 nations with the highest trade surpluses.

You can also link to:
nations' trade balances - Google Search

I hope you’re just ignorant rather than stupid and ignorant. Information cures ignorance but some people remain stupid their entire lives. It’s stupid to deny existence of nations’ annual global trade surpluses without at least doing a google search.

Supposn

Ed is just soo special, in his pleading.

 

[Supposn]

Task0778:
Totally wrong. A trade deficit does negatively impact the GDP number, but it does not necessarily impact the number of jobs.

Task0778:
I'm pretty sure the positive effects of an increased purchasing power resulting from increased competition due to cheaper foreign products is an absolute boon to every US family cuz their dollars go a lot further. Especially the families at or below the poverty level.

Task:
A reduction in GDP (also known as a recession or depression) obviously results in a loss of jobs because consumption and investment both decline. BUT, recessions and depressions clearly do not occur due to trade deficits, otherwise the US would've been in serious trouble over the past 40 some years when trade deficits blew up. Why? Because a TD does not necessarily translate to less consumption and less investment.

Task0778, you misunderstood. It’s not contended that trade balances alone consequential determined the consequential increase or decrease of their nation’s annual GDPs; but they always contributed or reduced their nation’s GDPs more than otherwise.

Trade deficits ALWAYS drag upon their nation’s GDP. Thus, for the years the nation experienced annual trade deficits, their GDP were less than otherwise); (otherwise being if the nation had not experienced annual trade deficits). Unless a nation is blessed with reasonably full employment, reduction of GDP is detrimental to numbers of jobs and affects wage scales.

Respectfully, Supposn