Breaking Down the U.S. Trade Balance

May 28, 2019

As an economy evolves and develops, it moves among three stages:

  • In the first stage, the economy relies mainly on producing agricultural goods.
  • In the second stage, it shifts away from agricultural goods to manufacturing goods.
  • In the third stage, the economy moves from manufacturing goods to providing services

In this video—taken from a recent Dialogue with the Fed event—Senior Economist Paulina Restrepo-Echavarria discusses how this shift has affected the U.S.’s trade balance with the rest of the world.

Since the U.S. has entered the third stage of its development, Restrepo-Echavarria says it should not be a surprise that the U.S. would have to import more goods than it exports, as its focus is now more on services. Relatedly, the U.S. has gone from a net importer of services to a net exporter of services over the past several decades.

Additional Resources

Related Topics

This blog offers commentary, analysis and data from our economists and experts. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.


Email Us

Media questions

All other blog-related questions

Back to Top