The US EconomyEconomics Project

Economics for Business

The USA EconomyProject Report submitted to Dr. Sujit

Dhruv Bhasin SMBA13019Maneck Debara SMBA13032

Charan Teja SMBA12010

IMT Dubai

Introduction of the countryThe United States of America (USA or the United States), commonly known as the United States is a federal republic consisting of 50 states and a federal district. The 48 contiguous states and Washington, DC, are in the center of North America between Canada and Mexico.

The United States is a developed country and has the largest national economy in the world. The economy is fueled by abundant natural resources and high worker productivity. While the economy of the United States is considered post-industrial, it continues to be one of the largest manufacturers in the world. The country accounts for 37% of global military spending, being primarily economic and military power in the world, a political and cultural force foreground, and a leader in scientific research and technological innovation.

Economy

The United States has a capitalist mixed economy, which is fueled by abundant natural resources and high productivity. The International Monetary Fund, the US GDP of $ 16.8 trillion constitutes 24% of the gross world product at market exchange rates and over 19% of the gross world product at purchasing power parity (PPP). Its national GDP was about 5% higher than the PPP in 2014 in the European Union, whose population is about 62% higher. However, the nominal GDP of the United States is estimated at $ 17.528 trillion in 2014, representing about 5% lower than in the EU. Annual growth from 1983 to 2008, real US GDP worse was 3.3%, compared to a weighted average of 2.3% for the which is about 5% smaller than that of the European Union.1 From 1983 to 2008, U.S. real compounded annual GDP growth was 3.3%, compared to a 2.3% weighted average for the rest of the G7.2 The country ranks ninth in the world in nominal GDP per capita and sixth in GDP per capita at PPP.3 The U.S. dollar is the world's primary reserve currency.

The United States is the largest importer of goods and second largest exporter, though exports per capita are relatively low. In 2010, the total U.S. trade deficit was $635 billion.4Canada, China, Mexico, Japan, and Germany are its top trading partners.5 In 2010, oil was the largest import commodity, while transportation equipment was the country's largest export.6 China is the largest foreign holder of U.S. public debt. The largest holder of the U.S. debt is American entities, including federal government accounts and the Federal Reserve, who hold the majority of the debt.

Consumer spending comprises 71% of the US economy in 2013. In August 2010, the American workforce consisted of 154,100,000 people. With 21.2 million people, government is the leading field of employment. The largest private employment sector

is health care and social assistance, with 16.4 million people. About 12% of workers are unionized, compared to 30% in Western Europe. The World Bank ranks the United States first in the ease of hiring and firing. The United States is the only advanced economy that does not guarantee its workers paid vacation and is one of the few countries in the world without paid family leave as a legal right, with the other being the

1

2

3

4

5

6

Papua New Guinea, Suriname and Liberia. In 2009, the United States had the third highest labor productivity per person in the world, behind Luxembourg and Norway. It was the fourth in productivity per hour, behind those two countries and the Netherlands.

Income, poverty and wealth

Americans have household income and the employee the highest average among OECD countries and in 2007 had a median household income in the second row. The real income of the median household Census Bureau was $ 50,502 in 2011, a decrease of $ 51,144 in 2010. The Global Food Security Index ranked number one for US food affordability and the overall safety of food in March 2013. Average Americans more than twice the surface area per unit per person as residents of the European Union, and of all EU nations. For 2013, the United Nations Development Program ranked 5th US among 187 countries in the Human Development Index and 28th in the Inequality-adjusted HDI (IHDI).

National income

The net national income (NNI) is a term used in the economy in the national income accounting. It can be defined as the net national product (NNP) minus indirect taxes. Net national income includes the income of households, businesses and government.

It may be expressed as:

NNI = C + I + G + (NX) income + net external factors - indirect taxes - made capital depreciation

Where C = Consumption, i = investment, G = government expenditure, NX = net exports (exports minus imports)

This formula uses the expenditure method of accounting of national income.

When adjusted net national income to the exhaustion of natural resources, it is called Adjusted net national income expressed as below:

NNI * = C + I + G + NX + Net foreign income Factor - Indirect taxes - the depreciation of manufactured capital - depletion of natural resources

Natural Resources refers to non-critical natural capital such as minerals. NNI * does not take into account critical natural capital. Examples are air, water, land, etc.

United states gdp

The gross domestic product (GDP) in the US was worth $ 16.8 trillion in 2013. The value of the US GDP represents 27.10 percent of the global economy. GDP in the United States averaged $ 6,145.56 billion from 1960 to 2013, reaching a record high of USD 16 800 billion in 2013 and a record high of 520.53 billion USD in 1960. The World Bank reports

GDP in the United States

Adjusted net national income (annual % growth)The value for adjusted net national income (annual % growth) in United States was -0.72 as of 2011. As the graph below shows, over the past 40 years this indicator reached a maximum value of 8.80 in 1984 and a minimum value of -4.19 in 1974.7

Year GDP % Growth

2004 3.732005 2.842006 3.242007 0.022008 -2.352009 -2.562010 4.272011 -0.72

7

2004 3.73

Economic Indicators

Markets Last Reference Previous Range Frequency

Currency 88.31 Nov/14 88.31 71.58 : 165 Daily

Government Bond 10Y 2.31 percent Nov/14 2.31 1.4 : 15.82 Daily

Stock Market 17810 Index points Nov/14 17810 41.2 : 17810 Daily

GDP Last Reference Previous Range Frequency

GDP 16800 USD Billion Dec/13 16800 521 : 16800 Yearly

GDP Growth Rate 3.5 percent Aug/14 3.5 -10 : 16.9 Quarterly

GDP Annual Growth Rate 2.3 percent Aug/14 2.3 -4.1 : 13.4 Quarterly

Gross National Product 16190 USD Billion May/14 16190 2096 : 16190 Quarterly

GDP per capita 45863 USD Dec/13 45863 15469 : 45863 Yearly

Employed Persons 147283 Thousand Oct/14 147283 57635 : 147283 Monthly

Unemployed Persons 8995 Thousand Oct/14 8995 1596 : 15382 Monthly

Job Vacancies 4762 Thousand Sep/14 4762 2134 : 5771 Monthly

Productivity 107 Index Points Aug/14 107 27.55 : 107 Quarterly

Wages 10.34 USD Oct/14 10.34 9.88 : 10.41 Monthly

Labour Costs 105 Index Points Aug/14 105 17.12 : 105 Quarterly

Population 317 Million Dec/13 317 76.09 : 317 Yearly

Job Offers 4735 Hundreds Sep/14 4735 2146 : 5273 Monthly

Markets Last Reference Previous Range Frequency

Minimum Wages 7.25 USD Jan/14 7.25 0.25 : 7.25 Yearly

Prices Last Reference Previous Range Frequency

Inflation Rate 1.7 percent Oct/14 1.7 -15.8 : 23.7 Monthly

Inflation Rate Mom 0 percent Oct/14 0 -1.77 : 1.81 Monthly

Consumer Price Index CPI 238 Index Points Oct/14 238 23.51 : 238 Monthly

Core Inflation Rate 1.8 percent Oct/14 1.8 0 : 13.6 Monthly

Core Consumer Prices 239 Index Points Oct/14 239 28.5 : 239 Monthly

GDP Deflator 109 Index Points Aug/14 109 13.49 : 109 Quarterly

Producer Prices 111 Index Points Oct/14 111 100 : 111 Monthly

Producer Prices Change 1.5 percent Oct/14 1.5 -6.86 : 19.57 Monthly

Export Prices 131 Index Points Oct/14 131 82.4 : 135 Monthly

Import Prices 136 Index Points Oct/14 136 75 : 148 Monthly

Food Inflation 3.1 percent Oct/14 3.1 -0.47 : 18.68 Monthly

Trade Last Reference Previous Range Frequency

Balance of Trade -43030 USD Million Sep/14 -43030 -67823 : 1946 Monthly

Exports 195590 USD Million Sep/14 195590 772 : 198570 Monthly

Imports 238620 USD Million Sep/14 238620 577 : 239858 Monthly

Current Account -98500 USD Million May/14 -98500 -216063 : 9957 Quarterly

Current Account to GDP -2.3 percent Dec/13 -2.3 -6 : 0.2 Yearly

Markets Last Reference Previous Range Frequency

Terms of Trade 97.27 Index Points Aug/14 97.27 91.05 : 167 Quarterly

Foreign Direct Investment -117086 USD Million Feb/14 -117086 -117086 : 140759 Quarterly

Gold Reserves 8133 Tonnes May/14 8133 8133 : 8149 Quarterly

Crude Oil Production 8648 BBL/D/1K Aug/14 8648 3983 : 10044 Monthly

Government Last Reference Previous Range Frequency

Government Budget -2.8 percent of GDP Sep/14 -2.8 -12.1 : 4.6 Yearly

Government Debt to GDP 102 percent Dec/13 102 31.7 : 122 Yearly

Government Budget Value -121713 USD Million Oct/14 -121713 -231677 : 189796 Monthly

Government Spending 2913 USD Billion Aug/14 2913 557 : 3113 Quarterly

Role of fiscal and monetary policy during global recession period (2007-2009)

Monetary policyIn the years since the financial crisis began in 2007, the Federal Reserve and other central banks took extraordinary measures and often unprecedented, first to respond to the crisis, and later trying to adjust policy economic conditions that have prevailed since. These actions were for outstanding loans from the central bank, the expansion of central bank balance sheets and the banking system reserves, expanding the range of assets purchased and the communication on future policy settings.While these unconventional policies of central banks may sometimes be necessary to meet the unconventional developments in the national and global economies, there are accompanying risks that are important to keep in mind. By examining these tools and their associated risks, it is useful to be clear about what constitutes conventional politics.Before the financial crisis, the typical central bank conducted monetary policy by controlling a nominal interest rate in the short term - usually a charge rate in interbank or other wholesale money market operations. In the United States, as in many other countries, this control was achieved by manipulating the supply of monetary liabilities of the central bank. Before the crisis, the relatively stable demand for interest-sensitive reserves by US banks to the range of regulations surrounding the use of these balances. Reservations required by law were small and without interest earned on reserves, banks sought to save on excess reserves. Against this

incentive to minimize reserve assets, banks demand was supported by the use of reserves in settlement of interbank obligations and by the desire to avoid costly overdrafts.The Fed has managed the supply of reserves by purchases and sales of US Treasury securities - or repo transactions in such securities - so that the overnight interest rate on the interbank lending market stocks hit target of the federal Open Market Committee. The FOMC in turn adjusted its target in response to changes in economic conditions and the economic outlook in order to achieve low and stable inflation in a manner consistent with its mandate to Congress (which also includes the pursuit of maximum employment and moderate long-term interest rates).

Unconventional policy

In the wake of the financial crisis and the recession that followed the Fed's policy has deviated in a number of ways to approach this classic before the crisis - as well as the policies of many other central banks. During the period from late 2007 to 2008, as the crisis unfolded, the Fed has conducted a number of emergency lending that exceeded the scope of previous precedents. At first, these loans have not been allowed to influence the stock of Federal Reserve monetary liabilities. This necessary compensation of US Treasury securities sales Fed's portfolio to drain reserves and avoid driving the interbank interest rate below the target of the Fed. These lending changed the composition of the Fed's asset portfolio without changing the monetary liabilities of the Fed, and constituted "the credit policy," not monetary policy. These loans raises important issues related to the independence of central banks and their role in the financial system.As the economy weakened in the fall of 2008, the Fed led the interbank interest rate to near zero. In general, the unconventional monetary policy is associated with the extended period of time since then, during which the Fed's interest rate target was essentially as low as it can go - in d other words, the "zero lower bound." The ability of banks and other members of the public to hold currency limit the ability of the central bank to implement a nominal target less than zero interest. But in an extremely economy low, the real interest rate may be appropriate negative a central bank that has credibility of low and stable inflation. - so that inflation expectations are reasonably well anchored - will struggle to make the rate of real interest plus a little negative.One strategy to the zero bound is to seek a lower real interest rate by designing an increase in expected inflation, above the rate of the central bank would be contrary to target. Away from its inflation target for a time, a central bank may be able to support economic growth by lowering the real interest rate, although being only able to reduce the nominal interest rate below scratch. Central banks operating at the lower zero bound have generally avoided this approach, and for good reason.In the US, for example, the process of achieving credibility of low inflation was difficult and expensive, taking the best part of two decades. This experience suggests that engineering medium-term changes in inflation expectations would be very difficult to implement and create precedents that pose longer-term risks to the credibility of the central bank.Forward direction

Putting aside the strategies for change in expected inflation, the Fed and other central banks to the zero bound have focused on long-term interest rates. They tried to strengthen the sensitive areas of interest by reducing long-term rates at lower levels. Two major strategies have been employed to try to reduce long-term rates: A provides "guide before" affect public beliefs about the future course of policy, including short-term rates, the other is based on direct purchases of long-term assets.The Fed has deployed a number of approaches to communicate its intentions and expectations for future short-term rates in recent years. The FOMC started including qualitative language in its policy statements characterizing the period during which it should exceptionally low interest rates are appropriate: Initially, it was "a while" (December 2008 and January 2009) then "an extended period" (March 2009-June 2011). In August 2011, the Committee focused its guidance by specifying the time within which an increase in the

federal funds rate seemed unlikely - and then moving again in future that date several times. Finally, in December 2012, the Committee has replaced this guide before based on the date with a threshold for unemployment, saying that "exceptionally low range for the federal funds rate will be appropriate at least as long as the rate of unemployment remains above 6 ½ percent inflation between one and two years ahead should be no more than half a percentage point above the 2 percent of the long-term objective of the commission, and long-term inflation expectations remain well anchored. "This guidance shape of the front still in place today.These communication efforts have generally been designed to ease financial conditions by pushing the dates on which market participants believe short-term rates are likely to increase. These communications by the central bank, but inevitably face a conundrum. Forward guidance is effective when it changes the model public perception of behavior of the central bank in response to incoming data -. "Reaction function" in essence, the central bank But there is always the possibility that the public will interpret the forward direction in terms of the future development of the economy in which the central bank reacts. The public may think that, under its current structure of behavior, the central bank is expected to be low rates guaranteed for a longer period because they expect the economy is weaker. In this case, the orientation of the front could have the paradoxical effect of reducing the current economic activity, reducing expectations about the level of future economic activity.7 It can be difficult to craft advice before in a way that definitely separates these two interpretations. The use by the FOMC numerical thresholds is partly an attempt to clarify the orientation of the front on short-term interest rate is about the Commission's reaction function, not its economic outlook .Ideally, a central bank can understand that communications concerning future reactions of incoming economic data. Forward-looking Information concerning reaction schemes of the central bank often takes the form of criteria for particular decisions, as in the case of the FOMC thresholds for raising interest rates or the conditions in which the asset purchase program indefinite will probably be awarded.Design such conditional orientation involves tradeoffs, however. Credibility requires consistency, over time, between the statements of a central bank and its real after. The statements of the central bank will have more immediate effect on public expectations more they are seen as limiting future choices of the central bank. Yet there are probably circumstances, ex post, in which the central bank feels constrained by past statements. Yielding to the temptation to deny implicitly reworking the decision criteria or citing unforeseen economic developments may have short-term appeal but widely perceived discrepancies between actual behavior and foreshadows inevitably reduce the faith people place in future statements of the central bank . So, central banks face a trade-off ex ante, and between the short-term value of the exercise of the discretion and the ability to communicate effectively and credibly in future

Recent fiscal policy

In a Financial Times interview, Blackrock Chief Executive Larry Fink said he believes it is time for the Fed to move forward. From the interview:"We have a central bank that did not agree, we have structural unemployment. Factories that employed thousands now employ 200. For the United States above-trend growth, it must be on the government not the policy of the central bank policy. "The company has produced what he calls Yellen index. This is an exclusive measure that examines employment and inflation indicators Fed chairman said in the past are important to her to predict what it might choose to do in the future. Regarding monitoring, we believe that for the first time monetary policy did what he will do. A 0% funds rate is not significant in terms of more transmission mechanism in the economy. Second, it is expected that for the first time, student loans, housing, discussion of infrastructure will begin to see a movement there for the first time in a while.They are right in the abstract that monetary policy can do some things, and it is for governments to do other things through the budgets and tax law. But in the United States

since 2010, things have not happened. The United States does not follow a fiscal policy more. They do not spend makes laws to help or change anything about the country and go penalty laws, once a year, or a wildly inefficient to keep any kind of trouble while working. Infrastructure is a concern and certainly there is a long list of infrastructure projects that need funding. The recent highway bill has only barely extended funding for existing projects. Not raising money from people who use the highways. However, depending on the version of the bill, he is the president, an independent accounting stunt that allows companies to temporarily less money in their pension plans, increasing the taxable income.

Recent monetary policy

The main innovation after the crisis in the US is a long time with the interest rate short-term policy to near 0%. This was combined with the payment of interest on reserves, an increase in the size of the Fed balance sheet, a radical change in the composition of the assets on the balance sheet, increasing the use of forward guidance and a change in the interpretation of the dual mandate.

Subsequently, the FOMC has apparently become much more militant. There seems to be a consensus among its participants, including doctoral economists with high-level research issues are becoming increasingly important, the Fed can and must make the world a better place. To reflect on monetary policy to the zero lower bound (the nominal interest rate in the short term), it is necessary to provide a rationale for why it may be optimal for a central bank to choose the zero target rate the overnight. In the new simple Keynesian models such as Werning, which is done by assuming that the discount factor of the representative agent is high for a certain period of time. Then, the real interest rate should be low optimally, but at the zero bound the real interest rate is too high, given the price rigidity. With this model, the central bank would reduce more than the lower limit of zero, but the prevailing attitude is to make promises about future actions of central banks. In addition, these promises can not be consistent time, so the commitment of the central bank is essential to the political work.

In a New Keynesian model, it is clear how forward guidance. He will tell us when the central bank should choose a short-term nominal interest rate target to zero, when the takeoff (departure terminal of the lower zero) should occur, and that the nominal interest rate target should be away from the zero bound. The path followed by the exogenous shocks to the economy determines all these things. In practice, we do not know how the model is, we can not observe shocks, and even if we believe that the model that will not allow us to identify the shocks. Thus, the orientation of the front should be loosely specified in terms of something we monitor effectively. Ultimately, the FOMC has chosen the unemployment rate.

Probably the key element in the novel post-financial crisis US monetary policy is Quantitative Easing (QE), and the associated increase in the size of the Fed's balance sheet. Fed officials want to convince us that QE works and they have tended to minimize the experimental nature of its programs. Fed officials say that QE works just like conventional monetary policy. Other than the fact that QE has its effect by reducing the yields on long-term bonds rather than the decline in short rates, demand is that the monetary policy transmission mechanism is more or less similar.

Finally, even if the Fed is now borrowing short and lending long, massive way, we should not worry if the Fed starts to earn negative profits. Economically, it does not matter. What matters is the consolidated balance sheet of the Fed and the US Treasury, and it is immaterial whether the Fed pays interest of the private sector in the reserves or the US Treasury pays the interest of the private sector on the public debt.

Perhaps the most important sustainable change in policy out of the Bernanke era is a greater tendency of the Fed to focus on short-term goals rather than long-term goals. Indeed, the concern of the Fed to the state of the labor market, as evidenced by recent public statements

by Fed officials may have evolved into a belief that the Fed may have long-term effects on participation in the labor market and the employment / population ratio. This seems to be supported by theory or empirical evidence. In addition, it is possible that two or three more years with the Fed's key interest rate near zero lower limit will not help to solve all the ills of the labor market, nor does it increase the rate of inflation, low nominal interest rates (such as in Japan since the early 1990s) typically lead to lower long-term inflation. If the Fed is well below its inflation target of 2% for a period of time, it is not clear that would be so dangerous, but at least, it undermines the credibility of the Fed.

Balance of payments

The US trade deficits have been in compliance since 1976 due to strong imports of oil and consumer products. In recent years, the biggest trade deficits were recorded with China, Japan, Germany and Mexico. United States recorded trade surpluses with Hong Kong, Netherlands, United Arab Emirates and Australia.In November 2014, the budget deficit fell by 58% to $ 56.8 billion compared with a difference $ 182.5 billion a year earlier than spending fell and revenue increased. In this month, revenues totaled $ 191.4 billion, up 4.8 percent from the same period a year ago while spending amounted to $ 248.3 billion, down 21 8 percent.

Fiscal performance has been affected by differences in the timing that some payments came out in October this year instead of November.

Current account

The current account deficit of US net measure of transactions between the US and the rest of the world in goods, services, primary income (compensation of income and investment) and the secondary income (current transfers) -decreased to $ 98.5 billion (preliminary) in the second quarter of 2014 of $ 102.1 billion (revised) in the first quarter. The deficit decreased to 2.3 percent in current dollars of gross domestic product (GDP) of 2.4 percent in the first quarter. The decrease in the current account deficit is largely due to a decrease in the high-income deficit. In addition, the increased surpluses on services and primary income. These changes were partially offset by an increase in the deficit on goods.

Goods and services

The deficit on goods and services increased 130.3 billion in the second quarter of $ 124.5 billion in the first quarter.

Goods

The goods deficit increased by $ 189.2 billion in the second quarter from $ 182.3 billion in the first quarter.

Merchandise exports increased to $ 408.8 billion from $ 399.5 million. Exports increased in five of the six major categories of final goods general use. The largest increases were in industrial supplies and materials; capital goods, with the exception of the automobile; and motor vehicles, parts and engines. Most of the increase in industrial supplies and materials reflects an increase in exports of oil and products, much of that in oil. The increase in capital goods, except automotive reflects an increase in exports of civil aircraft. The increase in motor vehicles, parts and engines was largely due to an increase in exports of passenger cars. Non-monetary gold fell.

Merchandise imports increased to 598.0 billion from $ 581.9 billion. Imports increased in five of the six major categories of final goods general use. The largest increases were in motor vehicles, parts and engines; capital goods, with the exception of the automobile; and consumer goods, excluding food and automotive. The increase in motor vehicles, parts and engines was largely due to an increase in passenger car imports. Much of the increase in capital goods, with the exception of the car was due to higher imports of other industrial machinery and computers. The increase in consumer goods, except food and automotive primarily reflects the increase in imports of durable goods, most of which was in cell phones.

Services

The services surplus increased to $ 58.9 billion in the second quarter to $ 57.8 billion in the first quarter.

Exports of services increased to $ 177.4 billion from $ 174.7 million. Eight of the nine major categories of services has increased. The largest increases were in travel (for any purpose, including education) -much of it in "Other personal travel" -and in transportation, which includes freight and ports and passenger fares.

Imports of services increased to $ 118.5 billion $ 116.8 million. Six of the nine major categories of services has increased. The largest increase has been in Travel (for any purpose, including education).

Primary income

The surplus on the primary income increased to $ 53.1 billion in the second quarter to $ 52.4 billion in the first quarter.

Investment income

Foreign income receipts on US securities of financial assets abroad rose to 200.0 billion from $ 198.5 billion. The increase was explained by an increase in portfolio investment income receipts. Much of the increase was in dividends on equity, which reflect to the US holdings of foreign equities. The increase in income from portfolio investment was partly offset by lower revenues from direct investment income, especially income from foreign subsidiaries (American parents) in the wholesale and manufacturing.

Income payments to foreigners on US liabilities increased to $ 144.6 billion from $ 144.0 billion. This increase reflects the increase in payments of direct investment income and other investment income payments. The increase in direct investment income was mainly explained by income payments of US subsidiaries (of foreign parents) in manufacturing and petroleum- related industries.

Compensation of employees

Receipts for compensation of US residents paid by non-residents remained at $ 1.7 billion in the second quarter. Compensation payments of foreign residents paid by US residents increased to 4.0 billion from 3.8 billion.

Secondary income (current transfers)

The deficit in secondary income decreased to $ 21.4 billion in the second quarter of $ 30.0 billion in the first quarter. Receipts and payments secondary income include US government and private transfers, such as US government subsidies and pensions, fines and penalties, withholding, personal transfers (remittances) transfers related to insurance, and other current transfers.

Revenues secondary income increased to $ 39.9 billion $ 31.7 billion, reflecting an increase in fines and penalties paid to the United States government (one of the US government transfer component).

Secondary income payments decreased $ 61.3 billion $ 61.7 billion, reflecting a decrease in subsidies from the US government.

Capital account

The capital account transactions are not available for the second quarter, because the source data is not yet available. Capital account transactions in the second quarter will be published with the release of third quarter US International Transactions 17 December 2014. In the first quarter, the capital account deficit was 0.04 billion.

Financial account

Net borrowing of the United States as measured by financial transactions account was $ 17.6 billion in the second quarter, down $ 91.2 billion in the first quarter. Both US net acquisition of financial assets excluding financial derivatives and net incurrence of liabilities excluding US financial derivatives were higher than in the first quarter, but the acquisition of financial assets excluding derivatives increased more. The shift to a negative net transactions in financial derivatives other than reserves moderate decline in net debt.US net acquisition of financial assets excluding financial derivatives

US net acquisition of financial assets excluding financial derivatives was $ 232.7 billion in the second quarter, against $ 143.3 billion in the first quarter.

Direct investment assets (equity instruments and debt)

Net acquisition of direct investment assets $ 89.2 billion in the second quarter, up $ 31.6 billion in the first quarter. This increase reflects equity investments higher than in the first quarter. Transactions (inter) of debt shifted to net acquisition.

Portfolio investment assets (shares and investment fund shares and debt securities)

Net acquisition of the US investment portfolio of foreign assets (acquisitions more sales) was $ 184.9 billion in the second quarter, against $ 100.7 billion in the first quarter.US net purchases of foreign equity and investment fund shares increased to $ 85.6 billion from $ 81.3 billion. US net purchases of foreign debt securities increased to $ 99.3 billion $ 19.4 billion US reflects, in part, the increase in net purchases of commercial paper and corporate bonds and notes.

Other investment assets (currency and deposits, loans, insurance technical reserves, credit and trade and advances)

US Sales of other investment assets abroad (sales of more acquisitions) was $ 42.2 billion in the second quarter, a change in net purchases of $ 12.0 billion the first quarter. The shift in net sales reflects a change in net foreign loan repayment (refund exceeding US foreign-resident provision of loans).

Reserve assets

Transactions in US reserve assets increased holdings of $ 0.8 billion in the second quarter after declining assets of $ 1.0 billion in the first quarter. The change reflects an increase in the reserve position of the United States in the International Monetary Fund that the Fund has drawn on the US credit through the New Arrangements to Borrow. Based on US credit is exceeded net repayments of dollars by countries that had borrowed from the IMF in previous quarters, the increase in the US reserve position.

US net birth liabilities excluding financial derivatives

US net foreign liabilities birth excluding financial derivatives was$ 247.4 billion in the second quarter, against $ 239.8 billion in the first quarter.

Direct investment liabilities (equity instruments and debt) Net incurrence of liabilities of foreign direct investment was $ 72.0 billion in the second quarter, a change in net debt repayments of $ 121.7 billion in the first quarter. The transition to the net increase primarily reflects a change to the investment of equity other than reinvestment of earnings of the first quarter of divestment. In addition, transactions in instruments (business) debt shifted to the net increase in net refund.

Liabilities related to portfolio investments (equities and investment funds units and debt securities)

The net increase US investment portfolio liabilities to foreigners was 74.8 billion in the second quarter, against $ 237.9 billion in the first quarter. Foreign net purchases of

Figure 1 : Balance of Payment

Foreign Reserve

Foreign Exchange Reserves in the United States decreased to 136285 USD Million in October of 2014 from 137054 USD Million in September of 2014. Foreign Exchange Reserves in the United States averaged 51845.24 USD Million from 1957 until 2014, reaching an all-time high of 153075 USD Million in September of 2012 and a record low of 12128 USD Million in August of 1971. Foreign Exchange Reserves in the United States is reported by the Federal Reserve.

Figure 2 : Foreign Exchange Reserves

ReferencesWhat Fiscal Policy? The U.S. Doesn't Do It Any More - Businessweek. 2014. What Fiscal Policy? The U.S. Doesn't Do It Any More - Businessweek. [ONLINE] Available at:http://www.businessweek.com/articles/2014-07-18/what-fiscal-policy.

2014 - [ONLINE] Available at: http://research.stlouisfed.org/publications/review/2014/q2/williamson.pdf. 

United States Government Budget Value | 1954-2014 | Data | Chart | Calendar . 2014. United States Government Budget Value | 1954-2014 | Data | Chart | Calendar . [ONLINE] Available at:http://www.tradingeconomics.com/united-states/government-budget-value

Amadeo, K. (2014). The Strange Ups and Downs of the U.S. Economy Since 1929. [online] About. Available at: http://useconomy.about.com/od/GDP-by-Year/a/US-GDP-History.htm.

Bea.gov, (2014). News Release: U.S. International Trade in Goods and Services. [online] Available at: http://www.bea.gov/newsreleases/international/trade/tradnewsrelease.htm.

Multpl.com, (2014). Consumer Price Index. [online] Available at: http://www.multpl.com/cpi/.

Tradingeconomics.com, (2014). United States | Economic Indicators. [online] Available at: http://www.tradingeconomics.com/united-states/indicators.