International Financial Law Prof Blog

Global e-commerce jumps to $26.7 trillion, 30% of global gross domestic product, COVID-19 boosts online sales

The dramatic rise in e-commerce amid movement restrictions induced by COVID-19 increased online retail sales’ share of total retail sales from 16% to 19% in 2020, according to estimates in an UNCTAD report published on 3 May.

UNCTAD released the report as it hosted a two-day meeting on measuring e-commerce and the digital economy.

According to the report, online retail sales grew markedly in several countries, with the Republic of Korea reporting the highest share at 25.9% in 2020, up from 20.8% the year before (Table 1).

Meanwhile, global e-commerce sales jumped to $26.7 trillion in 2019, up 4% from 2018, according to the latest available estimates.

This includes business-to-business (B2B) and business-to-consumer (B2C) sales, and is equivalent to 30% of global gross domestic product (GDP) that year.

The largest EU stimulus package ever

The EU’s long-term budget, coupled with NextGenerationEU, the temporary instrument designed to boost the recovery, will be the largest stimulus package ever financed through the EU budget. A total of €1.8 trillion will help rebuild a post-COVID-19 Europe. It will be a greener, more digital and more resilient Europe.

The new long-term budget will increase flexibility mechanisms to guarantee it has the capacity to address unforeseen needs. It is a budget fit not only for today's realities but also for tomorrow's uncertainties.

The last step of the adoption of the next long-term EU budget was reached on 17 December 2020.

Main elements of the agreement

Multiannual Financial Framework 2021-2027
total allocations per heading*

	MFF	NextGenerationEU	TOTAL
1. Single market, innovation and digital	€132.8 billion	€10.6 billion	€143.4 billion
2. Cohesion, resilience and values	€377.8 billion	€721.9 billion	€1 099.7 billion
3. Natural resources and environment	€356.4 billion	€17.5 billion	€373.9 billion
4. Migration and border management	€22.7 billion	-	€22.7 billion
5. Security and defence	€13.2 billion	-	€13.2 billion
6. Neighbourhood and the world	€98.4 billion	-	€98.4 billion
7. European public administration	€73.1 billion	-	€73.1 billion
TOTAL MFF	€1 074.3 billion	€750 billion	€1 824.3 billion

_{All amounts in € billion, in constant 2018 prices. Source: European Commission}

_{* The amounts include the targeted reinforcement of ten programmes for a total of €15 billion, compared to the agreement from 21 July 2020. The programmes are Horizon Europe, Erasmus+, EU4Health, Integrated Border Management Fund, Rights and Values, Creative Europe, InvestEU, European Border and Coast Guard Agency, Humanitarian Aid.}

NextGenerationEU

NextGenerationEU is a €750 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic. Post-COVID-19 Europe will be greener, more digital, more resilient and better fit for the current and forthcoming challenges.

• The Recovery and Resilience Facility: the centrepiece of NextGenerationEU with €672.5 billion in loans and grants available to support reforms and investments undertaken by EU countries. The aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions. Member States are working on their recovery and resilience plans to access the funds under the Recovery and Resilience Facility.
• Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU): NextGenerationEU also includes €47.5 billion for REACT-EU. It is a new initiative that continues and extends the crisis response and crisis repair measures delivered through the Coronavirus Response Investment Initiative and the Coronavirus Response Investment Initiative Plus. It will contribute to a green, digital and resilient recovery of the economy. The funds will be made available to
  - the European Regional Development Fund (ERDF)
  - the European Social Fund (ESF)
  - the European Fund for Aid to the Most Deprived (FEAD)
  These additional funds will be provided in 2021-2022.
• NextGenerationEU will also bring additional money to other European programmes or funds such as Horizon2020, InvestEU, rural development or the Just Transition Fund (JTF).

NextGenerationEU breakdown

Recovery and Resilience Facility (RRF)	€672.5 billion
of which, loans	€360 billion
of which, grants	€312.5 billion
ReactEU	€47.5 billion
Horizon Europe	€5 billion
InvestEU	€5.6 billion
Rural Development	€7.5 billion
Just Transition Funds (JTF)	€10 billion
RescEU	€1.9 billion
TOTAL	€750 billion

_{Source: Conclusions of the European Council of 21 July 2020}

Figures

NextGenerationEU figures per EU country

• Recovery and Resilience Facility: grants allocation per Member State
• REACT-EU: allocations 2021
• Just Transition Fund: allocations per Member State
• European Agricultural Fund for Rural Development: allocations per Member State

MFF figures per EU country

• MFF 2021-2027 Breakdown of Cohesion Policy allocations per Member State (2018 prices)
• MFF 2021-2027 Breakdown of Cohesion Policy allocations per Member State (current prices)
• MFF 2021-2027 Breakdown of European Agricultural Guarantee Fund per Member State (current prices)
• MFF 2021-2027 Breakdown of European Agricultural Fund for Rural Development per Member State (MFF only, current prices)

Financing the EU long-term budget and NextGenerationEU

The EU long-term budget will continue to be financed through the well-known revenue sources of the EU budget: customs duties contributions from the Member States based on value added tax (VAT) contributions based on gross national income (GNI) In addition, as of 1 January 2021, a new national contribution based on non-recycled plastic packaging waste will be introduced as a source of revenue of the EU budget.

Borrowing to finance the recovery

To finance NextGenerationEU, the European Commission - on behalf of the European Union – will borrow on the markets at more favourable rates than many Member States and redistribute the amounts. For the Commission to start borrowing, all Member States must ratify the new Own Resources Decision in line with their constitutional requirements.

The European Commission already issues bonds to finance loans to EU and third countries under four programmes, including up to €100 billion for the SURE programme to support jobs and keep people in work.

To raise up to around €800 billion in current prices until 2026 for NextGenerationEU under the best financial terms – 5% of EU GDP – the Commission will use a diversified funding strategy.

• Borrowing to finance the recovery
• NextGenerationEU diversified funding strategy

A clear roadmap towards new sources of revenue to help repay the borrowing

The Commission will put forward proposals by June 2021 on sources of revenue linked to:

	a carbon border adjustment mechanism
	a digital levy
	the EU Emissions Trading System

By June 2024, the Commission will propose new sources of revenue, such as:

	a Financial Transaction Tax
	a financial contribution linked to the corporate sector
	a new common corporate tax base

GDP increased at an annual rate of 6.4 percent, First Quarter 2021

Real gross domestic product (GDP) increased at an annual rate of 6.4 percent in the first quarter of 2021 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2020, real GDP increased 4.3 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see "Source Data for the Advance Estimate" on page 3). The "second" estimate for the first quarter, based on more complete data, will be released on May 27, 2021.

The increase in real GDP in the first quarter reflected increases in personal consumption expenditures (PCE), nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending that were partly offset by decreases in private inventory investment and exports. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

COVID-19 Impact on the First-Quarter 2021 GDP Estimate

The increase in first quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic. In the first quarter, government assistance payments, such as direct economic impact payments, expanded unemployment benefits, and Paycheck Protection Program loans, were distributed to households and businesses through the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2021 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The increase in PCE reflected increases in durable goods (led by motor vehicles and parts), nondurable goods (led by food and beverages) and services (led by food services and accommodations). The increase in nonresidential fixed investment reflected increases in equipment (led by information processing equipment) and intellectual property products (led by software). The increase in federal government spending primarily reflected an increase in payments made to banks for processing and administering the Paycheck Protection Program loan applications as well as purchases of COVID-19 vaccines for distribution to the public. The decrease in private inventory investment primarily reflected a decrease in retail trade inventories.

Current‑dollar GDP increased 10.7 percent, or $554.2 billion, in the first quarter to a level of $22.05 trillion. In the fourth quarter, GDP increased 6.3 percent, or $324.5 billion (tables 1 and 3). More information on the source data that underlie the estimates is available in the Key Source and Data Assumptions file on BEA's website.

The price index for gross domestic purchases increased 3.8 percent in the first quarter, compared with 1.7 percent in the fourth quarter (table 4). The PCE price index increased 3.5 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 2.3 percent, compared with an increase of 1.3 percent.

Personal Income

Current-dollar personal income increased $2.40 trillion in the first quarter, or 59.0 percent, compared with a decrease of $351.4 billion, or 6.9 percent, in the fourth quarter. The increase primarily reflected government social benefits related to pandemic relief programs, notably direct economic impact payments to households established by the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act (table 8). Additional information on several factors impacting personal income can be found in "Effects of Selected Federal Pandemic Response Programs on Personal Income."

Disposable personal income increased $2.36 trillion, or 67.0 percent, in the first quarter, compared with a decrease of $402.1 billion, or 8.8 percent, in the fourth quarter. Real disposable personal income increased 61.3 percent, compared with a decrease of 10.1 percent.

Personal saving was $4.12 trillion in the first quarter, compared with $2.25 trillion in the fourth quarter.  The personal saving rate—personal saving as a percentage of disposable personal income—was 21.0 percent in the first quarter, compared with 13.0 percent in the fourth quarter.

BEA logo and link to website BEA News: U.S. International Investment Position, Fourth Quarter and Year 2020

Fourth Quarter

The U.S. net international investment position, the difference between U.S. residents' foreign financial assets and liabilities, was –$14.09 trillion at the end of the fourth quarter of 2020, according to statistics released by the U.S. Bureau of Economic Analysis (BEA). Assets totaled $32.16 trillion and liabilities were $46.25 trillion.

At the end of the third quarter, the net investment position was –$13.86 trillion (Table 1).

The –$227.5 billion change in the net investment position from the third quarter to the fourth quarter came from net financial transactions of –$287.1 billion and net other changes in position, such as price and exchange rate changes, of $59.6 billion (Table A).

COVID-19 Impact on Fourth Quarter 2020 International Investment Position

The global pandemic and the economic recovery continued to impact the IIP in the fourth quarter of 2020. The economic effects of the COVID-19 pandemic cannot be quantified in the IIP statistics because the impacts are generally embedded in source data and cannot be separately identified.

Table A. Quarterly Change in the U.S. Net International Investment Position
Billions of dollars, not seasonally adjusted

	Position, 2020 Q3	Change in position in 2020 Q4			Position, 2020 Q4
		Total	Attributable to:
			Financial transactions	Other changes in position 1
U.S. net international investment position	-13,864.6	-227.5	-287.1	59.6	-14,092.1
Net position excluding financial derivatives	-13,891.6	-193.9	-289.7	95.8	-14,085.5
Financial derivatives other than reserves, net	26.9	-33.6	2.6	-36.2	-6.6
U.S. assets	29,516.5	2,639.5	(2)	(2)	32,156.0
Assets excluding financial derivatives	26,971.3	2,638.9	121.4	2,517.5	29,610.3
Financial derivatives other than reserves	2,545.2	0.6	(2)	(2)	2,545.7
U.S. liabilities	43,381.1	2,867.0	(2)	(2)	46,248.1
Liabilities excluding financial derivatives	40,862.9	2,832.9	411.2	2,421.7	43,695.8
Financial derivatives other than reserves	2,518.2	34.1	(2)	(2)	2,552.4
1. Disaggregation of other changes in position into price changes, exchange rate changes, and other changes in volume and valuation is presented for annual statistics released in June each year. 2. Financial transactions and other changes in financial derivatives positions are available on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

U.S. assets increased by $2.64 trillion, to a total of $32.16 trillion at the end of the fourth quarter, reflecting increases in all major categories of assets, particularly in portfolio investment and direct investment assets. Portfolio investment assets increased by $1.59 trillion, to $14.67 trillion, and direct investment assets increased by $955.5 billion, to $9.30 trillion, driven mainly by foreign stock price increases and, to a lesser extent, the appreciation of major foreign currencies against the U.S. dollar that raised the value of U.S. assets in dollar terms.

U.S. liabilities increased by $2.87 trillion, to a total of $46.25 trillion at the end of the fourth quarter, reflecting increases in all major categories of liabilities, particularly in portfolio investment and direct investment liabilities. Portfolio investment liabilities increased by $1.64 trillion, to $24.67 trillion, and direct investment liabilities increased by $1.12 trillion, to $11.97 trillion, driven mainly by U.S. stock price increases that raised the value of these liabilities.

Updates to Third Quarter 2020 International Investment Position Aggregates
Trillions of dollars, not seasonally adjusted

	Preliminary estimate	Revised estimate
U.S. net international investment position	-13.95	-13.86
U.S. assets	29.41	29.52
U.S. liabilities	43.36	43.38

Year 2020

The U.S. net international investment position was –$14.09 trillion at the end of 2020 compared to –$11.05 trillion at the end of 2019 (Table 1).

The –$3.04 trillion change in the net investment position from the end of 2019 to the end of 2020 came from net financial transactions of –$743.6 billion and net other changes in position, such as price and exchange rate changes, of –$2.30 trillion (Table B).

U.S. assets increased by $3.00 trillion, to a total of $32.16 trillion, at the end of 2020, reflecting increases in all major categories of assets, particularly in portfolio investment, financial derivatives, and direct investment assets. Portfolio investment assets increased $1.30 trillion, to $14.67 trillion, and direct investment assets increased $496.9 billion, to $9.30 trillion, driven mainly by the appreciation of major foreign currencies against the U.S. dollar that raised the value of U.S. assets in dollar terms, and to a lesser extent, by financial transactions. Financial derivatives increased $755.3 billion, to $2.55 trillion, mostly reflecting increases in single-currency interest rate contracts.

Table B. Annual Change in the U.S. Net International Investment Position
Billions of dollars

	Position, 2019	Change in position in 2020			Position, 2020
		Total	Attributable to:
			Financial transactions	Other changes in position 1
U.S. net international investment position	-11,050.5	-3,041.6	-743.6	-2,298.0	-14,092.1
Net position excluding financial derivatives	-11,070.7	-3,014.8	-740.3	-2,274.6	-14,085.5
Financial derivatives other than reserves, net	20.2	-26.8	-3.3	-23.5	-6.6
U.S. assets	29,152.8	3,003.2	(2)	(2)	32,156.0
Assets excluding financial derivatives	27,362.4	2,247.9	763.5	1,484.4	29,610.3
Financial derivatives other than reserves	1,790.4	755.3	(2)	(2)	2,545.7
U.S. liabilities	40,203.3	6,044.8	(2)	(2)	46,248.1
Liabilities excluding financial derivatives	38,433.0	5,262.7	1,503.7	3,759.0	43,695.8
Financial derivatives other than reserves	1,770.3	782.1	(2)	(2)	2,552.4
1. Disaggregation of other changes in position into price changes, exchange rate changes, and other changes in volume and valuation is presented for annual statistics released in June each year. 2. Financial transactions and other changes in financial derivatives positions are available on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

U.S. liabilities increased by $6.04 trillion, to a total of $46.25 trillion, at the end of 2020, reflecting increases in all major categories of liabilities, particularly in portfolio investment, direct investment, and financial derivatives liabilities. Portfolio investment liabilities increased by $3.28 trillion, to $24.67 trillion, and direct investment liabilities increased by $1.42 trillion, to $11.97 trillion, driven mainly by U.S. stock price increases and, to a lesser extent, financial transactions. Financial derivatives increased $782.1 billion, to $2.55 trillion, mostly reflecting increases in single-currency interest rate contracts.

Upcoming Update to the U.S. International Investment Position

The annual update of the U.S. international investment position will be released along with preliminary estimates for the first quarter of 2021 on June 30, 2021. A preview of the annual update will appear in the April 2021 issue of the Survey of Current Business.

U.S. International Trade in Goods and Services, February 2021

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $71.1 billion in February, up $3.3 billion from $67.8 billion in January, revised.

U.S. International Trade in Goods and Services Deficit

Deficit:	$71.1 Billion	+4.8%°
Exports:	$187.3 Billion	-2.6%°
Imports:	$258.3 Billion	-0.7%°
Next release: Tuesday, May 4, 2021 (°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, April 7, 2021

COVID-19 Impact on International Trade in Goods and Services

The global pandemic and the economic recovery continued to impact international trade in February 2021. The full economic effects of the pandemic cannot be quantified in the statistics because the impacts are generally embedded in source data and cannot be separately identified.

Exports, Imports, and Balance (exhibit 1)

February exports were $187.3 billion, $5.0 billion less than January exports. February imports were $258.3 billion, $1.7 billion less than January imports.

The February increase in the goods and services deficit reflected an increase in the goods deficit of $2.8 billion to $88.0 billion and a decrease in the services surplus of $0.5 billion to $16.9 billion.

Year-to-date, the goods and services deficit increased $56.5 billion, or 68.6 percent, from the same period in 2020. Exports decreased $36.2 billion or 8.7 percent. Imports increased $20.3 billion or 4.1 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit increased $0.7 billion to $68.6 billion for the three months ending in February.

• Average exports increased $1.1 billion to $189.9 billion in February.
• Average imports increased $1.8 billion to $258.5 billion in February.

Year-over-year, the average goods and services deficit increased $25.9 billion from the three months ending in February 2020.

• Average exports decreased $19.2 billion from February 2020.
• Average imports increased $6.7 billion from February 2020.

Exports (exhibits 3, 6, and 7)

Exports of goods decreased $4.8 billion to $131.1 billion in February.

  Exports of goods on a Census basis decreased $4.8 billion.

• Capital goods decreased $2.5 billion.
  • Other industrial machinery decreased $0.7 billion.
  • Civilian aircraft decreased $0.5 billion.
  • Semiconductors decreased $0.4 billion.
• Consumer goods decreased $0.9 billion.
• Foods, feeds, and beverages decreased $0.7 billion.
• Automotive vehicles, parts, and engines decreased $0.7 billion.

  Net balance of payments adjustments increased $0.1 billion.

Exports of services decreased $0.2 billion to $56.1 billion in February.

• Travel decreased $0.1 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods decreased $2.0 billion to $219.1 billion in February.

  Imports of goods on a Census basis decreased $2.1 billion.

• Automotive vehicles, parts, and engines decreased $3.4 billion.
  • Passenger cars decreased $1.8 billion.
• Consumer goods decreased $2.7 billion.
  • Pharmaceutical preparations decreased $3.9 billion.
• Industrial supplies and materials increased $3.5 billion.
  • Finished metal shapes increased $1.1 billion.
  • Crude oil increased $1.0 billion.
  • Natural gas increased $0.9 billion.

  Net balance of payments adjustments increased $0.1 billion.

Imports of services increased $0.3 billion to $39.2 billion in February.

• Transport increased $0.2 billion.
• Insurance services increased $0.1 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit increased $3.0 billion to $99.1 billion in February.

• Real exports of goods decreased $7.9 billion to $139.4 billion.
• Real imports of goods decreased $4.9 billion to $238.5 billion.

Revisions

Revisions to January exports

• Exports of goods were revised up $0.2 billion.
• Exports of services were revised up $0.1 billion.

Revisions to January imports

• Imports of goods were revised up less than $0.1 billion.
• Imports of services were revised down $0.1 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The February figures show surpluses, in billions of dollars, with South and Central America ($3.7), Brazil ($1.4), Hong Kong ($1.2), Singapore ($0.6), United Kingdom ($0.2), and Saudi Arabia ($0.1). Deficits were recorded, in billions of dollars, with China ($30.3), European Union ($19.0), Mexico ($6.8), Germany ($5.3), Japan ($4.5), Canada ($4.0), Italy ($3.2), France ($2.7), Taiwan ($2.4), South Korea ($2.3), and India ($1.7).

• The deficit with China increased $3.1 billion to $30.3 billion in February. Exports decreased $4.5 billion to $10.4 billion and imports decreased $1.5 billion to $40.6 billion.
• The deficit with Canada increased $2.2 billion to $4.0 billion in February. Exports decreased $0.5 billion to $23.7 billion and imports increased $1.7 billion to $27.7 billion.
• The deficit with Mexico decreased $5.1 billion to $6.8 billion in February. Exports increased $2.1 billion to $22.8 billion and imports decreased $3.0 billion to $29.6 billion.

Gross Domestic Product, Fourth Quarter and Year 2020

Real gross domestic product (GDP) increased at an annual rate of 4.1 percent in the fourth quarter of 2020 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 33.4 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 4.0 percent. With the second estimate, upward revisions to residential fixed investment, private inventory investment, and state and local government spending were partly offset by a downward revision to personal consumption expenditures (PCE) (see Technical Note).

The increase in real GDP reflected increases in exports, nonresidential fixed investment, PCE, residential fixed investment, and private inventory investment that were partly offset by decreases in state and local government spending and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

COVID-19 Impact on the Fourth-Quarter 2020 GDP Estimate

The increase in fourth-quarter GDP reflected both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic, including new restrictions and closures that took effect in some areas of the United States. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the fourth quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note and Federal Recovery Programs and BEA Statistics.

The increase in exports primarily reflected an increase in goods (led by industrial supplies and materials). The increase in nonresidential fixed investment reflected increases in all components, led by equipment (mainly transportation equipment). The increase in PCE was more than accounted for by spending on services (led by health care); spending on goods decreased (led by food and beverages). The increase in residential fixed investment primarily reflected investment in new single-family housing. The increase in private inventory investment was more than accounted for by an increase in manufacturing that was partly offset by a decrease in retail trade.

Current dollar GDP increased 6.1 percent at an annual rate, or $317.6 billion, in the fourth quarter to a level of $21.49 trillion. In the third quarter, GDP increased 38.3 percent, or $1.65 trillion (table 1 and table 3). More information on the source data that underlie the estimates is available in the "Key Source Data and Assumptions" file on BEA’s website.

The price index for gross domestic purchases increased 1.8 percent in the fourth quarter, compared with an increase of 3.3 percent in the third quarter (table 4). The PCE price index increased 1.6 percent, compared with an increase of 3.7 percent. Excluding food and energy prices, the PCE price index increased 1.4 percent, compared with an increase of 3.4 percent.

Updates to GDP

In the second estimate for the fourth quarter, real GDP increased 0.1 percentage point more than in the advance estimate issued last month, primarily reflecting upward revisions to residential fixed investment, private inventory investment, and state and local government spending that were partly offset by a downward revision to PCE. For more information, see the Technical Note. For information on updates to GDP, see the "Additional Information" section that follows.

	Advance Estimate	Second Estimate
	(Percent change from preceding quarter)
Real GDP	4.0	4.1
Current-dollar GDP	6.0	6.1
Gross domestic purchases price index	1.7	1.8
PCE price index	1.5	1.6
PCE price index excluding food and energy	1.4	1.4

---

Updates to Third-Quarter Wages and Salaries

In addition to presenting updated estimates for the fourth quarter, today's release presents revised estimates of third-quarter 2020 wages and salaries, personal taxes, and contributions for government social insurance, based on updated data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages program. Wages and salaries are now estimated to have increased $434.5 billion in the third quarter, a downward revision of $66.5 billion. With the incorporation of these new data, real gross domestic income is now estimated to have increased 24.1 percent in the third quarter, a downward revision of 1.7 percentage points from the previously published estimate.

GDP for 2020

Real GDP decreased 3.5 percent in 2020 (from the 2019 annual level to the 2020 annual level), compared with an increase of 2.2 percent in 2019 (table 1).

The decrease in real GDP in 2020 reflected decreases in PCE, exports, private inventory investment, nonresidential fixed investment, and state and local government that were partly offset by increases in federal government spending and residential fixed investment. Imports decreased (table 2).

The decrease in PCE in 2020 was more than accounted for by a decrease in services (led by food services and accommodations, health care, and recreation services). The decrease in exports reflected decreases in both services (led by travel) and goods (mainly non-automotive capital goods). The decrease in private inventory investment reflected widespread decreases led by retail trade (mainly motor vehicle dealers) and wholesale trade (mainly durable goods industries). The decrease in nonresidential fixed investment reflected decreases in structures (led by mining exploration, shafts, and wells) and equipment (led by transportation equipment) that were partly offset by an increase in intellectual property products (more than accounted for by software). The decrease in state and local government spending reflected a decrease in consumption expenditures (led by compensation).

The increase in federal government spending reflected an increase in nondefense consumption expenditures (led by an increase in purchases of intermediate services that supported the processing and administration of Paycheck Protection Program loan applications by banks on behalf of the federal government). The increase in residential fixed investment primarily reflected increases in improvements as well as brokers’ commissions and other ownership transfer costs.

Current-dollar GDP decreased 2.3 percent, or $498.3 billion, in 2020 to a level of $20.93 trillion, compared with an increase of 4.0 percent, or $821.3 billion, in 2019 (tables 1 and 3).

The price index for gross domestic purchases increased 1.2 percent in 2020, compared with an increase of 1.6 percent in 2019 (table 4). The PCE price index also increased 1.2 percent in 2020, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.4 percent, compared with an increase of 1.7 percent.

Measured from the fourth quarter of 2019 to the fourth quarter of 2020, real GDP decreased 2.4 percent during the period (table 6). That compared with an increase of 2.3 percent during 2019.

The price index for gross domestic purchases, as measured from the fourth quarter of 2019 to the fourth quarter of 2020, increased 1.3 percent during 2020. That compared with an increase of 1.4 percent during 2019. The PCE price index increased 1.2 percent, compared with an increase of 1.5 percent. Excluding food and energy, the PCE price index increased 1.4 percent, compared with an increase of 1.6 percent.

*          *          *

Next release, March 25, 2021 at 8:30 A.M. EDT

U.S. International Trade in Goods and Services, December 2020

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $66.6 billion in December, down $2.4 billion from $69.0 billion in November, revised.

U.S. International Trade in Goods and Services Deficit

Deficit:	$66.6 Billion	-3.5%°
Exports:	$190.0 Billion	+3.4%°
Imports:	$256.6 Billion	+1.5%°
Next release: March 5, 2021 (°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, February 5, 2021

Coronavirus (COVID-19) Impact on International Trade in Goods and Services

Exports and imports in December 2020 reflect both the ongoing impact of the COVID-19 pandemic and the continued economic recovery from the sharp declines earlier in the year. The full economic effects of the pandemic cannot be quantified in the trade statistics because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis continue to monitor data quality and have determined estimates in this release meet publication standards. For more information, see the frequently asked questions on goods from the Census Bureau and on services from BEA.

Exports, Imports, and Balance (exhibit 1)

December exports were $190.0 billion, $6.2 billion more than November exports. December imports were $256.6 billion, $3.8 billion more than November imports.

The December decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.8 billion to $84.2 billion and a decrease in the services surplus of $0.4 billion to $17.5 billion.

For 2020, the goods and services deficit increased $101.9 billion, or 17.7 percent, from 2019. Exports decreased $396.4 billion or 15.7 percent. Imports decreased $294.5 billion or 9.5 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit increased $1.3 billion to $66.5 billion for the three months ending in December.

• Average exports increased $4.0 billion to $185.2 billion in December.
• Average imports increased $5.3 billion to $251.6 billion in December.

Year-over-year, the average goods and services deficit increased $23.2 billion from the three months ending in December 2019.

• Average exports decreased $25.7 billion from December 2019.
• Average imports decreased $2.5 billion from December 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods increased $6.0 billion to $133.5 billion in December.

  Exports of goods on a Census basis increased $5.9 billion.

• Industrial supplies and materials increased $1.8 billion.
  • Crude oil increased $1.3 billion.
• Foods, feeds, and beverages increased $1.4 billion.
  • Soybeans increased $1.0 billion.
• Capital goods increased $1.1 billion.
• Automotive vehicles, parts, and engines increased $0.9 billion.

  Net balance of payments adjustments increased $0.1 billion.

Exports of services increased $0.3 billion to $56.5 billion in December.

• Travel increased $0.2 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods increased $3.1 billion to $217.7 billion in December.

  Imports of goods on a Census basis increased $3.0 billion.

• Industrial supplies and materials increased $2.7 billion.
  • Finished metal shapes increased $1.2 billion.
  • Other petroleum products increased $0.4 billion.
  • Crude oil increased $0.4 billion.
• Automotive vehicles, parts, and engines increased $2.0 billion.
  • Passenger cars increased $1.6 billion.
• Consumer goods decreased $1.9 billion.
  • Cell phones and other household goods decreased $1.5 billion.
  • Pharmaceutical preparations decreased $1.1 billion.

  Net balance of payments adjustments increased $0.2 billion.

Imports of services increased $0.7 billion to $38.9 billion in December.

• Travel increased $0.5 billion.
• Transport increased $0.2 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit decreased $2.4 billion to $94.8 billion in December.

• Real exports of goods increased $4.0 billion to $148.4 billion.
• Real imports of goods increased $1.6 billion to $243.2 billion.

Revisions

In addition to revisions to source data for the November statistics, the seasonally adjusted goods data were revised for January through November so that the totals of the seasonally adjusted months equal the annual totals.

Revisions to November exports

• Exports of goods were revised down $0.2 billion.
• Exports of services were revised down $0.2 billion.

Revisions to November imports

• Imports of goods were revised up $0.5 billion.
• Imports of services were revised down less than $0.1 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The December figures show surpluses, in billions of dollars, with South and Central America ($3.9), Hong Kong ($2.1), OPEC ($1.9), Brazil ($0.8), Saudi Arabia ($0.6), and United Kingdom ($0.2). Deficits were recorded, in billions of dollars, with China ($28.1), European Union ($19.2), Mexico ($10.3), Germany ($5.8), Japan ($5.5), Taiwan ($3.2), Italy ($3.2), India ($2.8), South Korea ($2.7), France ($1.6), Canada ($1.1), and Singapore ($0.9).

• The deficit with China decreased $2.3 billion to $28.1 billion in December. Exports increased $0.8 billion to $13.5 billion and imports decreased $1.5 billion to $41.7 billion.
• The deficit with Japan decreased $1.1 billion to $5.5 billion in December. Exports increased $0.3 billion to $5.5 billion and imports decreased $0.8 billion to $11.0 billion.
• The deficit with the European Union increased $2.5 billion to $19.2 billion in December. Exports decreased $0.7 billion to $19.7 billion and imports increased $1.7 billion to $38.9 billion.

Annual Summary for 2020

Exports, Imports, and Balance (exhibit 1)

For 2020, the goods and services deficit was $678.7 billion, up $101.9 billion from $576.9 billion in 2019. Exports were $2,131.9 billion, down $396.4 billion from 2019. Imports were $2,810.6 billion, down $294.5 billion from 2019.

The 2020 increase in the goods and services deficit reflected an increase in the goods deficit of $51.5 billion, or 6.0 percent, to $915.8 billion and a decrease in the services surplus of $50.4 billion, or 17.5 percent, to $237.1 billion.

As a percentage of U.S. gross domestic product, the goods and services deficit was 3.2 percent in 2020, up from 2.7 percent in 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods decreased $217.7 billion to $1,434.8 billion in 2020.

  Exports of goods on a Census basis decreased $211.5 billion.

• Capital goods decreased $87.5 billion.
  • Civilian aircraft decreased $27.4 billion.
  • Civilian aircraft engines decreased $18.4 billion.
• Industrial supplies and materials decreased $59.2 billion.
  • Other petroleum products decreased $15.5 billion.
  • Crude oil decreased $14.8 billion.
  • Fuel oil decreased $13.3 billion.
• Automotive vehicles, parts, and engines decreased $35.3 billion.
  • Automotive parts and accessories decreased $13.3 billion.
  • Passenger cars decreased $10.5 billion.
• Consumer goods decreased $30.8 billion.
  • Gem diamonds decreased $8.5 billion.
  • Artwork, antiques, and other collectibles decreased $4.5 billion.
  • Jewelry decreased $4.4 billion.

  Net balance of payments adjustments decreased $6.1 billion.

Exports of services decreased $178.7 billion to $697.1 billion in 2020.

• Travel decreased $117.2 billion.
• Transport decreased $34.7 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods decreased $166.2 billion to $2,350.6 billion in 2020.

  Imports of goods on a Census basis decreased $161.0 billion.

• Automotive vehicles, parts, and engines decreased $65.2 billion.
  • Passenger cars decreased $33.4 billion.
  • Automotive parts and accessories decreased $15.3 billion.
  • Trucks, buses, and special purpose vehicles decreased $10.8 billion.
• Industrial supplies and materials decreased $42.3 billion.
  • Crude oil decreased $50.2 billion.
  • Other petroleum products decreased $16.5 billion.
  • Nonmonetary gold increased $25.1 billion.
  • Finished metal shapes increased $23.7 billion.
• Capital goods decreased $31.2 billion.
  • Civilian aircraft engines decreased $11.1 billion.
  • Other industrial machinery decreased $6.7 billion.
  • Civilian aircraft parts decreased $6.7 billion.
  • Computers increased $11.5 billion.

  Net balance of payments adjustments decreased $5.3 billion.

Imports of services decreased $128.3 billion to $460.1 billion in 2020.

• Travel decreased $95.3 billion.
• Transport decreased $35.9 billion.

Goods by Selected Countries and Areas – Census Basis (exhibits 14 and 14a)

The 2020 figures show surpluses, in billions of dollars, with South and Central America ($39.8), Netherlands ($18.1), Hong Kong ($16.1), OPEC ($15.7), Brazil ($11.7), Australia ($9.1), United Kingdom ($8.8), and Belgium ($6.7). Deficits were recorded, in billions of dollars, with China ($310.8), European Union ($183.4), Mexico ($112.7), Germany ($57.3), Switzerland ($56.7), Ireland ($55.9), Japan ($55.4), Malaysia ($31.7), Taiwan ($29.9), Italy ($29.5), Thailand ($26.4), South Korea ($24.8), India ($23.8), France ($15.6), Canada ($15.0), Indonesia ($12.8), and Russia ($12.0).

• The deficit with Switzerland increased $30.0 billion to $56.7 billion in 2020. Exports increased $0.1 billion to $18.0 billion and imports increased $30.1 billion to $74.8 billion.
• The surplus with South and Central America decreased $13.0 billion to $39.8 billion in 2020. Exports decreased $31.2 billion to $130.5 billion and imports decreased $18.2 billion to $90.7 billion.
• The deficit with China decreased $34.4 billion to $310.8 billion in 2020. Exports increased $18.2 billion to $124.6 billion and imports decreased $16.2 billion to $435.4 billion.

BEA News: Gross Domestic Product, 4th Quarter and Year 2020

Real gross domestic product (GDP) increased at an annual rate of 4.0 percent in the fourth quarter of 2020 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 33.4 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see "Source Data for the Advance Estimate" on page 4). The "second" estimate for the fourth quarter, based on more complete data, will be released on February 25, 2021.

Real GDP: Percent change from preceding quarter, Q4 '20

The increase in real GDP reflected increases in exports, nonresidential fixed investment, personal consumption expenditures (PCE), residential fixed investment, and private inventory investment that were partly offset by decreases in state and local government spending and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

COVID-19 Impact on the Fourth-Quarter 2020 GDP Estimate

The increase in fourth quarter GDP reflected both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic, including new restrictions and closures that took effect in some areas of the United States. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the fourth quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The increase in exports primarily reflected an increase in goods (led by industrial supplies and materials). The increase in nonresidential fixed investment reflected increases in all components, led by equipment. The increase in PCE was more than accounted for by spending on services (led by health care); spending on goods decreased (led by food and beverages). The increase in residential fixed investment primarily reflected investment in new single-family housing. The increase in private inventory investment primarily reflected increases in manufacturing and in wholesale trade that were partly offset by a decrease in retail trade.

Current‑dollar GDP increased 6.0 percent at an annual rate, or $309.2 billion, in the fourth quarter to a level of $21.48 trillion. In the third quarter, GDP increased 38.3 percent, or $1.65 trillion (tables 1 and 3). More information on the source data that underlie the estimates is available in the Key Source and Data Assumptions file on BEA's website.

The price index for gross domestic purchases increased 1.7 percent in the fourth quarter, compared with an increase of 3.3 percent in the third quarter (table 4). The PCE price index increased 1.5 percent, compared with an increase of 3.7 percent in the third quarter. Excluding food and energy prices, the PCE price index increased 1.4 percent, compared with an increase of 3.4 percent.

Personal Income

Current-dollar personal income decreased $339.7 billion in the fourth quarter, compared with a decrease of $541.5 billion in the third quarter. The decrease in personal income was more than accounted for by decreases in personal current transfer receipts (notably, government social benefits related to the winding down of CARES Act pandemic relief programs) and proprietors' income that were partly offset by increases in compensation and personal income receipts on assets (table 8).

Disposable personal income decreased $372.5 billion, or 8.1 percent, in the fourth quarter, compared with a decrease of $638.9 billion, or 13.2 percent, in the third quarter. Real disposable personal income decreased 9.5 percent, compared with a decrease of 16.3 percent.

Personal saving was $2.33 trillion in the fourth quarter, compared with $2.83 trillion in the third quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 13.4 percent in the fourth quarter, compared with 16.0 percent in the third quarter. Additional information on factors impacting quarterly personal income and saving can be found in "Effects of Selected Federal Pandemic Response Programs on Personal Income."

GDP for 2020

Real GDP decreased 3.5 percent in 2020 (from the 2019 annual level to the 2020 annual level), compared with an increase of 2.2 percent in 2019 (table 1).

The decrease in real GDP in 2020 reflected decreases in PCE, exports, private inventory investment, nonresidential fixed investment, and state and local government that were partly offset by increases in federal government spending and residential fixed investment. Imports decreased (table 2).

The decrease in PCE in 2020 was more than accounted for by a decrease in services (led by food services and accommodations, health care, and recreation services). The decrease in exports reflected decreases in both services (led by travel) and goods (mainly non-automotive capital goods). The decrease in private inventory investment reflected widespread decreases led by retail trade (mainly motor vehicle dealers) and wholesale trade (mainly durable goods industries). The decrease in nonresidential fixed investment reflected decreases in structures (led by mining exploration, shafts, and wells) and equipment (led by transportation equipment) that were partly offset by an increase in intellectual property products (more than accounted for by software). The decrease in state and local government spending reflected a decrease in consumption expenditures (led by compensation).

The increase in federal government spending reflected an increase in nondefense consumption expenditures (led by an increase in purchases of intermediate services that supported the processing and administration of Paycheck Protection Program loan applications by banks on behalf of the federal government). The increase in residential fixed investment primarily reflected increases in improvements as well as brokers' commissions and other ownership transfer costs.

Current-dollar GDP decreased 2.3 percent, or $500.6 billion, in 2020 to a level of $20.93 trillion, compared with an increase of 4.0 percent, or $821.3 billion, in 2019 (tables 1 and 3).

The price index for gross domestic purchases increased 1.2 percent in 2020, compared with an increase of 1.6 percent in 2019 (table 4). The PCE price index also increased 1.2 percent in 2020, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.4 percent, compared with an increase of 1.7 percent.

Measured from the fourth quarter of 2019 to the fourth quarter of 2020, real GDP decreased 2.5 percent during the period (table 6). That compared with an increase of 2.3 percent during 2019.

The price index for gross domestic purchases, as measured from the fourth quarter of 2019 to the fourth quarter of 2020, increased 1.3 percent during 2020. That compared with an increase of 1.4 percent during 2019. The PCE price index increased 1.2 percent, compared with an increase of 1.5 percent. Excluding food and energy, the PCE price index increased 1.4 percent, compared with an increase of 1.6 percent.

U.S. International Transactions, 3rd Quarter 2020

Current Account Deficit Widens by 10.6 Percent in Third Quarter

Current Account Balance, Third Quarter

The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $17.2 billion, or 10.6 percent, to $178.5 billion in the third quarter of 2020, according to statistics released by the U.S. Bureau of Economic Analysis. The revised second quarter deficit was $161.4 billion.

The third quarter deficit was 3.4 percent of current dollar gross domestic product, up from 3.3 percent in the second quarter.

The $17.2 billion widening of the current account deficit in the third quarter mostly reflected an expanded deficit on goods that was partly offset by an expanded surplus on primary income.

Coronavirus (COVID-19) Impact on Third Quarter 2020 International Transactions

All major categories of current account transactions increased in the third quarter of 2020 following notable declines in the second quarter, reflecting the resumption of trade and other business activities that were postponed or restricted due to COVID-19. In the financial account, most of the currency swaps between the U.S. Federal Reserve System and foreign central banks that remained at the end of the second quarter were ended in the third quarter, contributing to the continued U.S. withdrawal of deposit assets abroad and the continued U.S. repayment of deposit and loan liabilities. A record level of net shipments of U.S. currency abroad to meet the demand for U.S. currency by foreign residents increased U.S. currency liabilities, partly offsetting the net repayment of U.S. deposit liabilities. The full economic effects of the COVID-19 pandemic cannot be quantified in the statistics because the impacts are generally embedded in source data and cannot be separately identified. For more information on the impact of COVID-19 on the statistics, see the technical note that accompanies this release.

Current Account Transactions (tables 1-5)

Exports of goods and services to, and income received from, foreign residents increased $99.4 billion, to $796.0 billion, in the third quarter. Imports of goods and services from, and income paid to, foreign residents increased $116.6 billion, to $974.5 billion.

Trade in Goods (table 2)

Exports of goods increased $68.4 billion, to $357.1 billion, and imports of goods increased $94.4 billion, to $602.7 billion. The increases in both exports and imports reflected increases in all major categories, led by automotive vehicles, parts, and engines, mainly parts and engines and passenger cars.

Trade in Services (table 3)

Exports of services increased $2.8 billion, to $164.8 billion, mainly reflecting an increase in charges for the use of intellectual property, mostly licenses for the use of outcomes of research and development, that was partly offset by a decrease in travel, primarily education-related travel. Imports of services increased $6.5 billion, to $107.7 billion, mainly reflecting increases in charges for the use of intellectual property, mostly licenses for the use of outcomes of research and development; in transport, primarily sea freight transport; and in travel, primarily other personal travel.

Primary Income (table 4)

Receipts of primary income increased $26.8 billion, to $238.7 billion, and payments of primary income increased $11.9 billion, to $190.6 billion. The increases in both receipts and payments mainly reflected increases in direct investment income, primarily earnings.

Secondary Income (table 5)

Receipts of secondary income increased $1.4 billion, to $35.3 billion, reflecting an increase in private transfers, mostly private sector fines and penalties, that was partly offset by a decrease in general government transfers, mainly government sector fines and penalties. Payments of secondary income increased $3.7 billion, to $73.5 billion, reflecting increases in private transfers, primarily private sector fines and penalties, and in general government transfers, mostly international cooperation.

Capital Account Transactions (table 1)

Capital transfer receipts increased $0.3 billion, to $0.4 billion, in the third quarter, reflecting the U.S. Department of State’s sale of a property in Hong Kong.

Financial Account Transactions (tables 1, 6, 7, and 8)

Net financial account transactions were −$221.1 billion in the third quarter, reflecting net U.S. borrowing from foreign residents.

Financial Assets (tables 1, 6, 7, and 8)

Third quarter transactions decreased U.S. residents’ foreign financial assets by $73.0 billion. Transactions decreased other investment assets, mostly currency and deposits, by $288.1 billion. Transactions in deposits included a net withdrawal by the U.S. Federal Reserve of $203.0 billion from deposits abroad related to the ending of currency swaps. Transactions increased direct investment assets, mostly equity, by $71.1 billion; portfolio investment assets, mostly equity securities, by $142.2 billion; and reserve assets by $1.8 billion.

Liabilities (tables 1, 6, 7, and 8)

Third quarter transactions increased U.S. liabilities to foreign residents by $172.0 billion. Transactions increased direct investment liabilities, both equity and debt, by $70.5 billion and portfolio investment liabilities, mostly equity securities, by $147.5 billion. Transactions decreased other investment liabilities, mostly loans, by $46.0 billion.

Financial Derivatives (table 1)

Net transactions in financial derivatives were $24.0 billion in the third quarter, reflecting net lending to foreign residents.

Updates to Second Quarter 2020 International Transactions Accounts Balances Billions of dollars, seasonally adjusted
	Preliminary estimate	Revised estimate
Current account balance	−170.5	−161.4
Goods balance	−219.3	−219.5
Services balance	54.4	60.9
Primary income balance	29.2	33.2
Secondary income balance	−34.9	−35.9
Net financial account transactions	−82.6	−206.6

*  *  *

Next release: March 23, 2021 at 8:30 A.M. EDT

BEA News: Activities of U.S. Affiliates of Foreign Multinational Enterprises, 2018

Majority-owned U.S. affiliates (MOUSAs) of foreign multinational enterprises (MNEs) employed 7.8 million workers in the United States in 2018, a 1.9 percent increase from 7.7 million in 2017, according to statistics on MOUSA operations and finances released by the Bureau of Economic Analysis.

MOUSAs accounted for 6.0 percent of total private-industry employment in the United States. Employment by MOUSAs was largest in manufacturing and in retail trade. MOUSAs with ultimate owners in the United Kingdom, Japan, and Germany were the largest contributors to total MOUSA employment. (See the Additional Information for definitions of MOUSAs and other terminology used in this release.)

Employment by Majority-Owned U.S. Affiliates, 2018

Current-dollar value added of MOUSAs, a measure of their direct contribution to U.S. gross domestic product (GDP), increased 8.4 percent to $1.1 trillion. MOUSAs accounted for 7.1 percent of total U.S. business-sector value added.

Expenditures for property, plant, and equipment by MOUSAs increased 4.0 percent to $277.4 billion. MOUSAs accounted for 16.3 percent of total U.S. private business capital expenditures. Research and development (R&D) performed by MOUSAs increased 6.6 percent to $66.9 billion. MOUSAs accounted for 15.2 percent of total U.S. business R&D.

MOUSA Share of Private Industry Employment by State, 2018

By state, private-industry employment accounted for by MOUSAs was highest in South Carolina (8.8 percent), Kentucky (8.4 percent), and Michigan (8.2 percent). In all three states, MOUSAs in the manufacturing industry employed the most workers.

Additional statistics on the activities of U.S. affiliates of foreign multinationals including sales, balance sheet and income statement items, compensation of employees, trade, and more are available on BEA's website. More industry, country, and state level detail are available on the website and will be highlighted in the December issue of the Survey of Current Business.

Updates to the statistics

Statistics for 2017 are revised to incorporate newly available and revised source data. Preliminary statistics for 2017 were released in November 2019 and highlighted in "Activities of U.S. Affiliates of Foreign Multinational Enterprises in 2017" in the December 2019 issue of the Survey of Current Business.

Updates to Statistics on 2017 Activities of U.S. Affiliates of Foreign Multinational Enterprises
Billions of dollars, except as noted

	Preliminary estimate	Revised estimate
Number of employees (thousands)	7,357.7	7,661.3
Value added	1,020.2	1,034.7
Expenditures for property, plant, and equipment	258.6	266.8
Research and development expenditures	62.6	62.8

USA Gross Domestic Product 3rd Quarter 2020 jumps 33%, but disposable personal income decreased 16%

Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see "Source Data for the Advance Estimate" on page 2). The "second" estimate for the third quarter, based on more complete data, will be released on November 25, 2020.

Real GDP: Percent change from preceding quarter, Q3 2020 (Adv)

COVID-19 Impact on the Third-Quarter 2020 GDP Estimate

The increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The increase in real GDP reflected increases in personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans) and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The increase in PCE reflected increases in services (led by health care as well as food services and accommodations) and goods (led by motor vehicles and parts as well as clothing and footwear). The increase in private inventory investment primarily reflected an increase in retail trade (led by motor vehicle dealers). The increase in exports primarily reflected an increase in goods (led by automotive vehicles, engines, and parts as well as capital goods). The increase in nonresidential fixed investment primarily reflected an increase in equipment (led by transportation equipment). The increase in residential fixed investment primarily reflected an increase in brokers' commissions and other ownership transfer costs.

Current‑dollar GDP increased 38.0 percent, or $1.64 trillion, in the third quarter to a level of $21.16 trillion. In the second quarter, GDP decreased 32.8 percent, or $2.04 trillion (tables 1 and 3).

The price index for gross domestic purchases increased 3.4 percent in the third quarter, in contrast to a decrease of 1.4 percent in the second quarter (table 4). The PCE price index increased 3.7 percent, in contrast to a decrease of 1.6 percent. Excluding food and energy prices, the PCE price index increased 3.5 percent, in contrast to a decrease of 0.8 percent.

Personal Income

Current-dollar personal income decreased $540.6 billion in the third quarter, in contrast to an increase of $1.45 trillion in the second quarter. The decrease in personal income was more than accounted for by a decrease in personal current transfer receipts (notably, government social benefits related to pandemic relief programs) that was partly offset by increases in compensation and proprietors' income (table 8). Additional information on several factors impacting personal income can be found in "Effects of Selected Federal Pandemic Response Programs on Personal Income."

Disposable personal income decreased $636.7 billion, or 13.2 percent, in the third quarter, in contrast to an increase of $1.60 trillion, or 44.3 percent, in the second quarter. Real disposable personal income decreased 16.3 percent, in contrast to an increase of 46.6 percent.

Personal saving was $2.78 trillion in the third quarter, compared with $4.71 trillion in the second quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 15.8 percent in the third quarter, compared with 25.7 percent in the second quarter.

U.S. International Trade in Goods and Services, August 2020

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $67.1 billion in August, up $3.7 billion from $63.4 billion in July, revised.

U.S. International Trade in Goods and Services Deficit

Deficit:	$67.1 Billion	+5.9%°
Exports:	$171.9 Billion	+2.2%°
Imports:	$239.0 Billion	+3.2%°
Next release: November 4, 2020 (°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, October 6, 2020

Coronavirus (COVID-19) Impact on International Trade in Goods and Services

Exports and imports in August reflect both the ongoing impact of the COVID-19 pandemic and the continued recovery from the sharp declines earlier this year. The full economic effects of the pandemic cannot be quantified in the trade statistics because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis continue to monitor data quality and have determined estimates in this release meet publication standards. For more information, see the frequently asked questions on goods from the Census Bureau and on services from BEA.

Exports, Imports, and Balance (exhibit 1)

August exports were $171.9 billion, $3.6 billion more than July exports. August imports were $239.0 billion, $7.4 billion more than July imports.

The August increase in the goods and services deficit reflected an increase in the goods deficit of $3.0 billion to $83.9 billion and a decrease in the services surplus of $0.7 billion to $16.8 billion.

Year-to-date, the goods and services deficit increased $22.6 billion, or 5.7 percent, from the same period in 2019. Exports decreased $296.1 billion or 17.6 percent. Imports decreased $273.5 billion or 13.1 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit increased $3.1 billion to $61.3 billion for the three months ending in August.

• Average exports increased $10.0 billion to $165.2 billion in August.
• Average imports increased $13.1 billion to $226.6 billion in August.

Year-over-year, the average goods and services deficit increased $10.1 billion from the three months ending in August 2019.

• Average exports decreased $44.8 billion from August 2019.
• Average imports decreased $34.7 billion from August 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods increased $3.5 billion to $119.1 billion in August.

  Exports of goods on a Census basis increased $3.4 billion.

• Industrial supplies and materials increased $3.9 billion.
  • Nonmonetary gold increased $1.8 billion.
• Foods, feeds, and beverages increased $1.1 billion.
  • Soybeans increased $1.0 billion.
• Capital goods decreased $1.4 billion.
  • Semiconductors decreased $1.2 billion.

  Net balance of payments adjustments increased $0.1 billion.

Exports of services increased $0.1 billion to $52.8 billion in August.

• Other business services increased $0.2 billion.
• Transport increased $0.1 billion.
• Charges for the use of intellectual property increased $0.1 billion.
• Travel decreased $0.2 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods increased $6.5 billion to $203.0 billion in August.

  Imports of goods on a Census basis increased $6.5 billion.

• Consumer goods increased $3.8 billion.
  • Pharmaceutical preparations increased $2.7 billion.
• Automotive vehicles, parts, and engines increased $1.7 billion.
  • Passenger cars increased $1.0 billion.
• Other goods increased $1.1 billion.
• Industrial supplies and materials decreased $1.5 billion.
  • Nonmonetary gold decreased $2.1 billion.
  • Finished metal shapes decreased $1.6 billion.
  • Crude oil increased $1.0 billion.

  Net balance of payments adjustments increased less than $0.1 billion.

Imports of services increased $0.8 billion to $36.1 billion in August.

• Travel increased $0.3 billion.
• Transport increased $0.3 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit increased $1.2 billion to $92.3 billion in August.

• Real exports of goods increased $3.5 billion to $136.7 billion.
• Real imports of goods increased $4.7 billion to $229.0 billion.

Revisions

Revisions to July exports

• Exports of goods were revised up $0.2 billion.
• Exports of services were revised up less than $0.1 billion.

Revisions to July imports

• Imports of goods were revised up $0.1 billion.
• Imports of services were revised down less than $0.1 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The August figures show surpluses, in billions of dollars, with South and Central America ($2.4), Hong Kong ($1.7), OPEC ($1.3), Brazil ($1.0), United Kingdom ($1.0), Saudi Arabia ($0.2), and Singapore ($0.1). Deficits were recorded, in billions of dollars, with China ($26.4), European Union ($15.7), Mexico ($12.5), Germany ($4.6), Japan ($4.3), Italy ($2.6), Taiwan ($2.6), India ($2.3), France ($2.2), South Korea ($2.2), and Canada ($1.2).

• The deficit with Germany increased $1.6 billion to $4.6 billion in August. Exports decreased $0.3 billion to $4.9 billion and imports increased $1.2 billion to $9.6 billion.
• The deficit with Japan increased $1.0 billion to $4.3 billion in August. Exports increased $0.6 billion to $5.3 billion and imports increased $1.5 billion to $9.6 billion.
• The deficit with China decreased $1.9 billion to $26.4 billion in August. Exports increased $1.7 billion to $11.2 billion and imports decreased $0.2 billion to $37.7 billion.

U.S. International Investment Position, Second Quarter 2020

The U.S. net international investment position, the difference between U.S. residents’ foreign financial assets and liabilities, was –$13.05 trillion at the end of the second quarter of 2020, according to statistics released by the U.S. Bureau of Economic Analysis (BEA). Assets totaled $28.87 trillion and liabilities were $41.92 trillion.

At the end of the first quarter, the net investment position was –$12.16 trillion (Table 1).

The –$882.6 billion change in the net investment position from the first quarter to the second quarter came from net financial transactions of –$77.5 billion and net other changes in position, such as price and exchange rate changes, of –$805.1 billion (Table A).

Coronavirus (COVID-19) Impact on Second Quarter 2020 International Investment Position

In the second quarter of 2020, U.S. assets and liabilities increased following the first quarter decreases that reflected the impact of the COVID-19 pandemic. A recovery in global stock prices, responding to monetary accommodation and fiscal stimulus measures in the United States and abroad, drove the increases in portfolio investment and direct investment assets and liabilities. Both U.S. deposit assets and liabilities decreased, as some currency swap transactions between the U.S. Federal Reserve System and several foreign central banks in Europe and Japan were allowed to expire amid improved liquidity conditions in the global dollar funding markets. These currency swaps were initiated in the first quarter to alleviate the dollar shortage overseas. The full economic effects of the COVID-19 pandemic cannot be quantified in the IIP statistics because the impacts are generally embedded in source data and cannot be separately identified. For more information on the currency swaps, see the technical note that accompanied the September 18 international transactions accounts news release.

Table A. Quarterly Change in the U.S. Net International Investment Position
Billions of dollars, not seasonally adjusted

	Position, 2020 Q1	Change in position in 2020 Q2			Position, 2020 Q2
		Total	Attributable to:
			Financial transactions	Other changes in position 1
U.S. net international investment position	-12,163.3	-882.6	-77.5	-805.1	-13,045.9
Net position excluding financial derivatives	-12,197.0	-871.1	-137.8	-733.3	-13,068.1
Financial derivatives other than reserves, net	33.7	-11.5	60.3	-71.7	22.2
U.S. assets	26,921.3	1,951.5	(2)	(2)	28,872.8
Assets excluding financial derivatives	23,925.2	2,196.8	-141.1	2,337.9	26,122.0
Financial derivatives other than reserves	2,996.1	-245.3	(2)	(2)	2,750.8
U.S. liabilities	39,084.5	2,834.1	(2)	(2)	41,918.6
Liabilities excluding financial derivatives	36,122.1	3,067.9	-3.3	3,071.3	39,190.1
Financial derivatives other than reserves	2,962.4	-233.8	(2)	(2)	2,728.6
1. Disaggregation of other changes in position into price changes, exchange rate changes, and other changes in volume and valuation is only presented for annual statistics released in June each year. 2. Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

U.S. assets increased by $1.95 trillion, to a total of $28.87 trillion, at the end of the second quarter, mostly reflecting increases in portfolio investment and direct investment assets that were partly offset by decreases in financial derivatives and other investment assets. Portfolio investment assets increased by $1.39 trillion, to $12.39 trillion, and direct investment assets increased by $938.8 billion, to $7.94 trillion, driven mainly by increases in foreign stock prices that raised the value of these assets. Global stock prices recovered from the decreases that occurred in the first quarter at the onset of the COVID-19 pandemic.

U.S. liabilities increased by $2.83 trillion, to a total of $41.92 trillion, at the end of the second quarter, mostly reflecting increases in portfolio investment and direct investment liabilities that were partly offset by decreases in other investment liabilities and financial derivatives. Portfolio investment liabilities increased by $2.10 trillion, to $22.03 trillion, and direct investment liabilities increased by $1.34 trillion, to $10.10 trillion, driven mainly by increases in U.S. stock prices that raised the value of these liabilities.

Updates to First Quarter 2020 International Investment Position Aggregates Trillions of dollars, not seasonally adjusted
	Preliminary estimate	Revised estimate
U.S. net international investment position	-12.06	−12.16
U.S. assets	26.77	26.92
U.S. liabilities	38.82	39.08

*          *          *

Next release: December 29, 2020 at 8:30 A.M. EST
U.S. International Investment Position, Third Quarter 2020

COVID-19 has changed online shopping forever, survey shows

The pandemic has accelerated the shift towards a more digital world and triggered changes in online shopping behaviours that are likely to have lasting effects

The COVID-19 pandemic has forever changed online shopping behaviours, according to a survey of about 3,700 consumers in nine emerging and developed economies.

The survey, entitled “COVID-19 and E-commerce”, examined how the pandemic has changed the way consumers use e-commerce and digital solutions. It covered Brazil, China, Germany, Italy, the Republic of Korea, Russian Federation, South Africa, Switzerland and Turkey.

Following the pandemic, more than half of the survey’s respondents now shop online more frequently and rely on the internet more for news, health-related information and digital entertainment.

Consumers in emerging economies have made the greatest shift to online shopping, the survey shows.

“The COVID-19 pandemic has accelerated the shift towards a more digital world. The changes we make now will have lasting effects as the world economy begins to recover,” said UNCTAD Secretary-General Mukhisa Kituyi.

He said the acceleration of online shopping globally underscores the urgency of ensuring all countries can seize the opportunities offered by digitalization as the world moves from pandemic response to recovery.

Online purchases rise but consumer spending falls

The survey conducted by UNCTAD and Netcomm Suisse eCommerce Association, in collaboration with the Brazilian Network Information Center (NIC.br) and Inveon, shows that online purchases have increased by 6 to 10 percentage points across most product categories.

The biggest gainers are ICT/electronics, gardening/do-it-yourself, pharmaceuticals, education, furniture/household products and cosmetics/personal care categories (Figure 1).

Figure 1: Percentage of online shoppers making at least one online purchase every two months

Source: UNCTAD and NetComm Suisse eCommerce Association

However, average online monthly spending per shopper has dropped markedly (Figure 2). Consumers in both emerging and developed economies have postponed larger expenditures, with those in emerging economies focusing more on essential products.

Tourism and travel sectors have suffered the strongest decline, with average spending per online shopper dropping by 75%.

Figure 2: Fall of average online spending per month since COVID-19, per product category

Source: UNCTAD and NetComm Suisse eCommerce Association

“During the pandemic, online consumption habits in Brazil have changed significantly, with a greater proportion of internet users buying essential products, such as food and beverages, cosmetics and medicines,” said Alexandre Barbosa, manager of the Regional Center of Studies on the Development of Information Society (Cetic.br) at the Brazilian Network Information Center (NIC.br).

Increases in online shopping during COVID-19 differ between countries, with the strongest rise noted in China and Turkey and the weakest in Switzerland and Germany, where more people were already engaging in e-commerce.

The survey found that women and people with tertiary education increased their online purchases more than others. People aged 25 to 44 reported a stronger increase compared with younger ones. In the case of Brazil, the increase was highest among the most vulnerable population and women.

Also, according to survey responses, small merchants in China were most equipped to sell their products online and those in South Africa were least prepared.

“Companies that put e-commerce at the heart of their business strategies are prepared for the post-COVID-19 era,” said Yomi Kastro, founder and CEO of Inveon. “There is an enormous opportunity for industries that are still more used to physical shopping, such as fast-moving consumer goods and pharmaceuticals.”

“In the post-COVID-19 world, the unparalleled growth of e-commerce will disrupt national and international retail frameworks,” said Carlo Terreni, President, NetComm Suisse eCommerce Association.

“This is why policymakers should adopt concrete measures to facilitate e-commerce adoption among small and medium enterprises, create specialized talent pools and attract international e-commerce investors.”

Digital giants grow stronger

According to the survey, the most used communication platforms are WhatsApp, Instagram and Facebook Messenger, all owned by Facebook.

However, Zoom and Microsoft Teams have benefitted the most from increases in the use of video calling applications in workplaces.

In China, the top communication platforms are WeChat, DingTalk and Tencent Conference, the survey shows.

Changes are here to stay

The survey results suggest that changes in online activities are likely to outlast the COVID-19 pandemic.

Most respondents, especially those in China and Turkey, said they’d continue shopping online and focusing on essential products in the future.

They’d also continue to travel more locally, suggesting a lasting impact on international tourism.

Gross Domestic Product, Corporate Profits, and GDP by Industry (Annual Update), Second Quarter 2020

Real gross domestic product (GDP) decreased at an annual rate of 31.4 percent in the second quarter of 2020 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.

The “third” estimate of GDP released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the decrease in real GDP was 31.7 percent. The upward revision with the third estimate primarily reflected an upward revision to personal consumption expenditures (PCE) that was partly offset by downward revisions to exports and to nonresidential fixed investment (see "Updates to GDP" on page 3).

Coronavirus (COVID-19) Impact on the Second-Quarter 2020 GDP Estimate

The decline in second quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The decrease in real GDP reflected decreases in PCE, exports, nonresidential fixed investment, private inventory investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).

The decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in residential investment primarily reflected decreases in new single-family housing.

Current-dollar GDP decreased 32.8 percent, or $2.04 trillion, in the second quarter to a level of $19.52 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion (tables 1 and 3). More information on the source data that underlie the estimates is available in the "Key Source Data and Assumptions" file on BEA’s website.

The price index for gross domestic purchases decreased 1.4 percent in the second quarter, in contrast to an increase of 1.4 percent in the first quarter (table 4). The PCE price index decreased 1.6 percent, in contrast to an increase of 1.3 percent. Excluding food and energy prices, the PCE price index decreased 0.8 percent, in contrast to an increase of 1.6 percent.

Gross Domestic Income and Corporate Profits

Real gross domestic income (GDI) decreased 33.5 percent in the second quarter, compared with a decrease of 2.5 percent in the first quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 32.5 percent in the second quarter, compared with a decrease of 3.7 percent in the first quarter (table 1).

Real GDP by Industry

Today’s release includes estimates of GDP by industry, or value added—a measure of an industry’s contribution to GDP. Private goods-producing industries decreased 34.4 percent, private services-producing industries decreased 33.1 percent, and government decreased 16.6 percent (table 12). Overall, 20 of 22 industry groups contributed to the second-quarter decline in real GDP.

Within private goods-producing industries, the leading contributor to the decrease was durable goods manufacturing (led by motor vehicles, bodies and trailers, and parts) (table 13).

Within private services-producing industries, the leading contributors to the decrease were accommodation and food services (led by food services and drinking places); health care and social assistance (led by ambulatory health care); transportation and warehousing (led by air transportation); arts, entertainment, and recreation; wholesale trade; and professional, scientific, and technical services. Offsetting these decreases was an increase in finance and insurance (led by the securities and banking industries).

The decrease in government was more than accounted for by a decrease in state and local government which was partly offset by an increase in federal government.

Gross Output by Industry

Real gross output—principally a measure of an industry’s sales or receipts, which includes sales to final users in the economy (GDP) and sales to other industries (intermediate inputs)—decreased 29.5 percent in the second quarter. This reflected a decrease of 32.6 percent for private services-producing industries, a decrease of 29.7 percent for private goods-producing industries, and a decrease of 7.6 percent for government (table 16). Overall, 20 of 22 industry groups contributed to the decrease in real gross output. Finance and insurance as well as federal government gross output increased.

Annual Update of the Industry Economic Accounts

The industry estimates released today reflect the results of the 2020 Annual Update of the Industry Economic Accounts. The update covers the first quarter of 2015 through the first quarter of 2020. Major improvements introduced with this update include:

• Incorporation of the results from the 2020 Annual Update of the National Income and Product Accounts. For details on methodology improvements, major source data incorporated, and results, see “The 2020 Annual Update of the National Income and Product Accounts” in the August Survey of Current Business.
• Incorporation of newly available and revised source data, including the Census Bureau’s Service Annual Survey (SAS), the Bureau of Labor Statistics’ (BLS) Quarterly Census of Employment and Wages, and the Department of Treasury’s Statistics of Income.
• Introduction of a new implicit price deflator for import duties recorded in wholesale trade that conceptually captures changes in both the price of the underlying duties as well as changes in duty rates to improve the deflation of customs duties.
• Adoption of several retail trade producer price indexes (PPIs) due to the discontinuation of various detailed retail trade industries in the BLS PPI program.
• Incorporation of new educational services output indicators based on SAS revenue and taxable and tax-exempt expense data.
• Adoption of new commercial fishing indicators for quarterly estimates from 2017 onward using BLS PPIs and Census Manufacturers’ Shipments, Inventories, and Orders (M3) survey data due to the discontinuation of National Oceanic and Atmospheric Administration data on monthly commercial fishing landings and prices.

The full results of the annual update of the industry economic accounts, including updated annual supply-use tables, can be found on the BEA Web site. Additional information will be available in an article in the October 2020 issue of the Survey of Current Business.

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $208.9 billion in the second quarter, compared with a decrease of $276.2 billion in the first quarter (table 10).

Profits of domestic financial corporations increased $26.5 billion in the second quarter, in contrast to a decrease of $42.2 billion in the first quarter. Profits of domestic nonfinancial corporations decreased $145.9 billion, compared with a decrease of $190.5 billion. Rest-of-the-world profits decreased $89.5 billion, compared with a decrease of $43.5 billion. In the second quarter, receipts decreased $134.5 billion, and payments decreased $45.0 billion.

Updates to GDP

In the third estimate, the second-quarter change in real GDP was revised up 0.3 percentage point from the second estimate. PCE, residential investment, and state and local government spending were revised up. These upward revisions were partly offset by downward revisions to exports and to private nonresidential fixed investment (mainly intellectual property products). For more information, see the Technical Note and the "Additional Information" section that follows.

	Advance Estimate	Second Estimate	Third Estimate
	(Percent change from preceding quarter)
Real GDP	-32.9	-31.7	-31.4
Current-dollar GDP	-34.3	-33.3	-32.8
Real GDI	…	-33.1	-33.5
Average of Real GDP and Real GDI	…	-32.4	-32.5
Gross domestic purchases price index	-1.5	-1.5	-1.4
PCE price index	-1.9	-1.8	-1.6
PCE price index excluding food and energy	-1.1	-1.0	-0.8

U.S. International Transactions: Current Account Deficit Widens by 52.9 Percent in Second Quarter

 

Current Account Balance, Second Quarter

The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $59.0 billion, or 52.9 percent, to $170.5 billion in the second quarter of 2020, according to statistics from the U.S. Bureau of Economic Analysis (BEA). The revised first quarter deficit was $111.5 billion.

The second quarter deficit was 3.5 percent of current dollar gross domestic product, up from 2.1 percent in the first quarter.

The $59.0 billion widening of the current account deficit in the second quarter mostly reflected an expanded deficit on goods and reduced surpluses on primary income and on services.

Coronavirus (COVID-19) Impact on Second Quarter 2020 International Transactions

All major categories of current account transactions declined in the second quarter of 2020 resulting in part from the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted. In the financial account, the ending of some currency swaps between the U.S. Federal Reserve System and some central banks in Europe and Japan contributed to U.S. withdrawal of deposit assets and U.S. repayment of deposit liabilities. The full economic effects of the COVID-19 pandemic cannot be quantified in the statistics because the impacts are generally embedded in source data and cannot be separately identified. For more information on the impact of COVID-19 on the statistics, see the technical note that accompanies this release.

Current Account Transactions

Exports of goods and services to, and income received from, foreign residents decreased $209.3 billion, to $688.0 billion, in the second quarter. Imports of goods and services from, and income paid to, foreign residents decreased $150.2 billion, to $858.5 billion.

Trade in Goods 

Exports of goods decreased $114.6 billion, to $288.9 billion, mostly reflecting decreases in industrial supplies and materials, mainly petroleum and products; in capital goods, mainly civilian aircraft, engines, and parts; and in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars. Imports of goods decreased $87.1 billion, to $508.2 billion, mostly reflecting decreases in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars, and in industrial supplies and materials, mostly petroleum and products.

Trade in Services 

Exports of services decreased $46.3 billion, to $155.8 billion, and imports of services decreased $35.4 billion, to $101.3 billion. The decreases in both exports and imports mostly reflected decreases in travel, primarily other personal travel, and in transport, primarily air passenger transport.

Primary Income 

Receipts of primary income decreased $47.1 billion, to $209.4 billion, mostly reflecting decreases in portfolio investment income, primarily income on equity securities, and in direct investment income, primarily earnings. Payments of primary income decreased $24.3 billion, to $180.2 billion, reflecting decreases in all components, led by other investment income, primarily interest on loans and deposits.

Secondary Income

Receipts of secondary income decreased $1.2 billion, to $33.9 billion, mostly reflecting a decrease in private transfers, primarily private sector fines and penalties. Payments of secondary income decreased $3.4 billion, to $68.8 billion, reflecting decreases in private transfers, primarily private sector fines and penalties, and in general government transfers, primarily international cooperation.

Capital Account Transactions 

Capital transfer payments decreased $1.9 billion, to $1.1 billion, in the second quarter, mostly reflecting a decrease in investment grants.

Financial Account Transactions 

Net financial account transactions were −$82.6 billion in the second quarter, reflecting net U.S. borrowing from foreign residents.

Financial Assets 

Second quarter transactions decreased U.S. residents’ foreign financial assets by $147.6 billion. Transactions decreased portfolio investment assets by $29.8 billion, primarily equity securities, and other investment assets, mostly deposits, by $158.6 billion. Transactions in deposits included a net withdrawal by the U.S. Federal Reserve of $130.8 billion from deposits abroad. Transactions increased direct investment assets, primarily equity, by $35.9 billion, and reserve assets by $5.0 billion.

Liabilities 

Second quarter transactions decreased U.S. liabilities to foreign residents by $4.8 billion. Transactions decreased direct investment liabilities, mainly debt instruments, by $8.5 billion and other investment liabilities, mostly deposits, by $335.2 billion. Foreign banks withdrew $213.0 billion of their deposits in U.S. banks. Transactions increased portfolio investment liabilities, mainly short-term U.S. Treasury securities, by $339.0 billion.

Financial Derivatives 

Net transactions in financial derivatives were $60.3 billion in the second quarter, reflecting net lending to foreign residents.

Updates to First Quarter 2020 International Transactions Accounts Balances Billions of dollars, seasonally adjusted
	Preliminary estimate	Revised estimate
Current account balance	-104.2	−111.5
Goods balance	−192.3	−191.7
Services balance	73.3	65.3
Primary income balance	52.5	52.0
Secondary income balance	−37.6	−37.1
Net financial account transactions	−201.1	−143.1

*  *  *

Next release: December 18, 2020 at 8:30 A.M. EST

U.S. International Trade in Goods and Services, July 2020

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the goods and services deficit was $63.6 billion in July, up $10.1 billion from $53.5 billion in June, revised.

U.S. International Trade in Goods and Services Deficit

Deficit:	$63.6 Billion	+18.9%°
Exports:	$168.1 Billion	+8.1%°
Imports:	$231.7 Billion	+10.9%°
Next release: October 6, 2020 (°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, September 3, 2020

Coronavirus (COVID-19) Impact on July 2020 International Trade in Goods and Services

Exports and imports increased in July but remained below pre-pandemic levels, reflecting the ongoing impact of COVID-19, as many businesses continued to operate at limited capacity or ceased operations completely, and the movement of travelers across borders remained restricted. The full economic effects of the COVID-19 pandemic cannot be quantified in the trade statistics because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis continue to monitor data quality and have determined estimates in this release meet publication standards. For more information, see the frequently asked questions on goods from the Census Bureau and on services from BEA.

Exports, Imports, and Balance (exhibit 1)

July exports were $168.1 billion, $12.6 billion more than June exports. July imports were $231.7 billion, $22.7 billion more than June imports.

The July increase in the goods and services deficit reflected an increase in the goods deficit of $9.3 billion to $80.9 billion and a decrease in the services surplus of $0.8 billion to $17.4 billion.

Year-to-date, the goods and services deficit increased $6.4 billion, or 1.8 percent, from the same period in 2019. Exports decreased $257.8 billion or 17.5 percent. Imports decreased $251.3 billion or 13.8 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit increased $3.3 billion to $58.3 billion for the three months ending in July.

• Average exports increased $6.9 billion to $155.1 billion in July.
• Average imports increased $10.2 billion to $213.4 billion in July.

Year-over-year, the average goods and services deficit increased $6.9 billion from the three months ending in July 2019.

• Average exports decreased $55.7 billion from July 2019.
• Average imports decreased $48.8 billion from July 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods increased $12.3 billion to $115.5 billion in July.

  Exports of goods on a Census basis increased $12.3 billion.

• Automotive vehicles, parts, and engines increased $3.8 billion.
  • Passenger cars increased $2.1 billion.
• Consumer goods increased $2.6 billion.
  • Gem diamonds increased $0.7 billion.
  • Artwork, antiques, and other collectibles increased $0.6 billion.
• Industrial supplies and materials increased $2.5 billion.
  • Crude oil increased $1.1 billion.
  • Other petroleum products increased $0.4 billion.
• Capital goods increased $2.5 billion.
  • Semiconductors increased $0.8 billion.
  • Civilian aircraft engines increased $0.5 billion.

  Net balance of payments adjustments decreased less than $0.1 billion.

Exports of services increased $0.4 billion to $52.6 billion in July.

• Other business services increased $0.3 billion.
• Transport increased $0.3 billion.
• Charges for the use of intellectual property increased $0.1 billion.
• Travel decreased $0.4 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods increased $21.5 billion to $196.4 billion in July.

  Imports of goods on a Census basis increased $21.5 billion.

• Automotive vehicles, parts, and engines increased $7.7 billion.
  • Passenger cars increased $3.7 billion.
  • Automotive parts and accessories increased $2.5 billion.
• Industrial supplies and materials increased $4.4 billion.
  • Finished metal shapes increased $1.3 billion.
  • Nonmonetary gold increased $0.9 billion.
  • Crude oil increased $0.7 billion.
• Capital goods increased $4.1 billion.
  • Civilian aircraft increased $1.7 billion.
  • Electric apparatus increased $0.4 billion.
  • Generators and accessories increased $0.4 billion.
• Consumer goods increased $3.5 billion.
  • Cell phones and other household goods increased $1.7 billion.
  • Cotton apparel and household goods increased $0.7 billion.
  • Furniture and household items increased $0.7 billion.

  Net balance of payments adjustments increased $0.1 billion.

Imports of services increased $1.2 billion to $35.3 billion in July.

• Transport increased $0.5 billion.
• Travel increased $0.3 billion.
• Charges for the use of intellectual property increased $0.1 billion.
• Insurance services increased $0.1 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit increased $10.1 billion to $90.5 billion in July.

• Real exports of goods increased $13.1 billion to $133.7 billion.
• Real imports of goods increased $23.2 billion to $224.2 billion.

Revisions

Exports and imports of goods and services were revised for January through June 2020 to incorporate more comprehensive and updated quarterly and monthly data.

Revisions to June exports

• Exports of goods were revised up $0.3 billion.
• Exports of services were revised down $3.1 billion.

Revisions to June imports

• Imports of goods were revised down $0.2 billion.
• Imports of services were revised up $0.2 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The July figures show surpluses, in billions of dollars, with South and Central America ($2.9), OPEC ($1.5), Hong Kong ($1.4), Brazil ($0.8), United Kingdom ($0.6), and Saudi Arabia ($0.3). Deficits were recorded, in billions of dollars, with China ($28.3), European Union ($13.1), Mexico ($11.5), Japan ($3.4), Germany ($3.0), Taiwan ($2.8), France ($2.5), India ($2.0), Italy ($1.8), South Korea ($1.5), Singapore ($1.0), and Canada ($0.5).

• The deficit with Mexico increased $2.5 billion to $11.5 billion in July. Exports increased $2.4 billion to $17.8 billion and imports increased $4.9 billion to $29.3 billion.
• The deficit with China increased $1.6 billion to $28.3 billion in July. Exports increased $0.1 billion to $9.5 billion and imports increased $1.7 billion to $37.8 billion.
• The surplus with South and Central America increased $1.2 billion to $2.9 billion in July. Exports increased $1.3 billion to $9.7 billion and imports increased $0.1 billion to $6.8 billion.

Goods and Services by Selected Countries and Areas: Quarterly – Balance of Payments Basis (exhibit 20)

Statistics on trade in goods and services by country and area are only available quarterly, with a one-month lag. With this release, second-quarter figures are now available.

The second-quarter figures show surpluses, in billions of dollars, with South and Central America ($13.0), OPEC ($6.4), United Kingdom ($4.0), Brazil ($3.4), Saudi Arabia ($1.9), Hong Kong ($1.6), Canada ($0.6), and Singapore ($0.2). Deficits were recorded, in billions of dollars, with China ($75.8), European Union ($24.8), Mexico ($15.0), Germany ($12.4), Japan ($6.9), Taiwan ($6.7), India ($6.4), Italy ($4.9), South Korea ($4.5), and France ($2.7).

• The deficit with China increased $21.4 billion to $75.8 billion in the second quarter. Exports increased $2.5 billion to $36.8 billion and imports increased $23.9 billion to $112.6 billion.
• The surplus with South and Central America decreased $8.1 billion to $13.0 billion in the second quarter. Exports decreased $21.9 billion to $46.4 billion and imports decreased $13.8 billion to $33.4 billion.
• The deficit with Mexico decreased $13.2 billion to $15.0 billion in the second quarter. Exports decreased $25.7 billion to $43.2 billion and imports decreased $38.9 billion to $58.2 billion.

BEA News: Gross Domestic Product, 2nd Quarter 2020 (Second Estimate); Corporate Profits, 2nd Quarter 2020 (Preliminary Estimate)

Real gross domestic product (GDP) decreased at an annual rate of 31.7 percent in the second quarter of 2020 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the decrease in real GDP was 32.9 percent. With the second estimate, private inventory investment and personal consumption expenditures (PCE) decreased less than previously estimated (see "Updates to GDP" on page 2).

Coronavirus (COVID-19) Impact on the Second-Quarter 2020 GDP Estimate

The decline in second quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The decrease in real GDP reflected decreases in PCE, exports, nonresidential fixed investment, private inventory investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).

The decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in residential investment primarily reflected a decrease in new single-family housing.

Real gross domestic income (GDI) decreased 33.1 percent in the second quarter, compared with a decrease of 2.5 percent in the first quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 32.4 percent in the second quarter, compared with a decrease of 3.7 percent in the first quarter (table 1).

Current-dollar GDP decreased 33.3 percent, or $2.07 trillion, in the second quarter to a level of $19.49 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion (table 1 and table 3).

The price index for gross domestic purchases decreased 1.5 percent in the second quarter, in contrast to an increase of 1.4 percent in the first quarter (table 4). The PCE price index decreased 1.8 percent, in contrast to an increase of 1.3 percent. Excluding food and energy prices, the PCE price index decreased 1.0 percent, in contrast to an increase of 1.6 percent.

More information on the source data that underlie the estimates is available in the "Key Source Data and Assumptions" file on BEA’s website.

Updates to GDP

In the second estimate, real GDP decreased 31.7 percent in the second quarter, an upward revision of 1.2 percentage points from the previous estimate issued last month. The revision primarily reflected upward revisions to private inventory investment and PCE. For more information, see the Technical Note. For information on updates to GDP, see the "Additional Information" section that follows.

	Advance Estimate	Second Estimate
	(Percent change from preceding quarter)
Real GDP	-32.9	-31.7
Current-dollar GDP	-34.3	-33.3
Real GDI	…	-33.1
Average of Real GDP and Real GDI	…	-32.4
Gross domestic purchases price index	-1.5	-1.5
PCE price index	-1.9	-1.8
PCE price index excluding food and energy	-1.1	-1.0

Updates to First-Quarter Wages and Salaries

In addition to presenting updated estimates for the second quarter, today's release presents revised estimates of first-quarter wages and salaries, personal taxes, and contributions for government social insurance, based on updated data from the BLS Quarterly Census of Employment and Wages program. Wages and salaries are now estimated to have increased $103.6 billion in the first quarter of 2020, a downward revision of $3.4 billion. Real GDI decreased 2.5 percent in the first quarter, unrevised from the previously published estimate.

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $226.9 billion in the second quarter, compared with a decrease of $276.2 billion in the first quarter (table 10).

Profits of domestic financial corporations increased $39.5 billion in the second quarter, in contrast to a decrease of $42.2 billion in the first quarter. Profits of domestic nonfinancial corporations decreased $170.1 billion, compared with a decrease of $190.5 billion. Rest-of-the-world profits decreased $96.2 billion, compared with a decrease of $43.5 billion. In the second quarter, receipts decreased $139.7 billion, and payments decreased $43.4 billion.

EXIM Board Votes to Notify Congress of Two Potential Transactions Totaling $400 Million to Support an Estimated 1,700 U.S. Jobs, and American Small Business Exports

Transactions Could Support Jobs in California, Colorado, Connecticut, Georgia, Illinois, Iowa, Louisiana, Minnesota, Oklahoma, Pennsylvania, and Texas in the Oil and Gas Equipment and Services Industry  The Export-Import Bank of the United States (EXIM) Board of Directors today unanimously voted to notify the U.S. Congress, pursuant to the law, of its consideration of two transactions that would facilitate the authorization of a $350 million general facility and $50 million small business facility (SBF) for Petroleos Mexicanos (Pemex). If approved, the combined $400 million financing facilities would support an estimated 1,700 jobs in California, Colorado, Connecticut, Georgia, Illinois, Iowa, Louisiana, Minnesota, Oklahoma, Pennsylvania, and Texas in the oilfield services industry, which has faced difficulties as a result of the COVID-19 pandemic. EXIM received the applications from PEMEX for the facilities in March 2020.

The 2015-2019 lapse in EXIM’s Board quorum suspended the agency’s 76-year association with Pemex, Mexico’s state-owned oil company that conducts exploration, production, industrial processing and refining, logistics, and marketing. During the four-year absence of a Board quorum at EXIM, China sought to step into the breach to grow its influence in the region and pursued closer ties with Pemex, notwithstanding the company’s previous financings with EXIM.

These transactions will help fill in private sector financing gaps and provide certainty to an industry suffering in the current economic climate because of the global pandemic shutdown, as well as provide a valuable alternative to Chinese offerings. EXIM financing under these transactions also will facilitate the purchase of U.S. oil and gas equipment and services provided to approximately 21 oil and gas field projects.

“With today’s unanimous Board action to notify Congress of these potential transactions, EXIM is taking a step toward supporting more American jobs and small business exports and furthering our nation’s prosperity and security. In addition to being our neighbor, Mexico is the United States’ second-largest export market and third-largest trading market,” said EXIM President and Chairman of the Board Kimberly A. Reed. “In addition to supporting an estimated 1,700 jobs in 11 states across the United States, these authorizations would help counter financing competition from foreign export credit agencies, including from China, and reinforce to our allies and partners around the globe—including Mexico—that EXIM is open for business.”

“The EXIM Board of Directors has taken important steps to support American workers by voting to notify Congress of these transactions that would support 1,700 jobs nationwide,” said EXIM Board Member Spencer T. Bachus, III. “EXIM is fulfilling its purpose of by providing access to liquidity when commercial lenders are unable or unwilling to assume the risk.”

ABOUT EXIM:

EXIM is an independent federal agency that promotes and supports American jobs by providing competitive and necessary export credit to support sales of U.S. goods and services to international buyers. A robust EXIM can level the global playing field for U.S. exporters when they compete against foreign companies that receive support from their governments. EXIM also contributes to U.S. economic growth by helping to create and sustain hundreds of thousands of jobs in exporting businesses and their supply chains across the United States. In recent years, approximately 90 percent of the total number of the agency’s authorizations has directly supported small businesses. Since 1992, EXIM has generated more than $9 billion for the U.S. Treasury for repayment of U.S. debt.

Activities of U.S. Multinational Enterprises, 2018

Worldwide employment by U.S. multinational enterprises (MNEs) increased 1.4 percent to 43.0 million workers in 2018 from 42.4 million in 2017, according to statistics released by the Bureau of Economic Analysis on the operations and finances of U.S. parent companies and their foreign affiliates.

Employment in the United States by U.S. parents increased 2.1 percent to 28.6 million workers in 2018. U.S. parents accounted for 66.5 percent of worldwide employment by U.S. MNEs, up from 66.1 percent in 2017. Employment abroad by majority-owned foreign affiliates (MOFAs) of U.S. MNEs was nearly unchanged at 14.4 million workers and accounted for 33.5 percent of employment by U.S. MNEs worldwide.

U.S. parents accounted for 22.0 percent of total private industry employment in the United States. Employment by U.S. parents was largest in manufacturing and retail trade. Employment abroad by MOFAs was largest in China, the United Kingdom, Mexico, India, and Canada.

Worldwide current-dollar value added of U.S. MNEs increased 6.8 percent to $5.7 trillion. Value added by U.S. parents, a measure of their direct contribution to U.S. gross domestic product, increased 7.8 percent to $4.2 trillion, representing 23.3 percent of total U.S. private-industry value added. MOFA value added increased 4.1 percent to $1.5 trillion. Value added by MOFAs was largest in the United Kingdom, Canada, and Ireland.

Worldwide expenditures for property, plant, and equipment of U.S. MNEs increased 6.6 percent to $912.1 billion. Expenditures by U.S. parents accounted for $721.6 billion and MOFA expenditures for $190.4 billion.

Worldwide research and development expenditures of U.S. MNEs increased 6.9 percent to $381.4 billion. U.S. parents accounted for expenditures of $323.1 billion and MOFAs for $58.2 billion.

Additional statistics on the activities of U.S. parent companies and their foreign affiliates including sales, balance sheet and income statement items, compensation of employees, trade in goods, and more are available on BEA’s website. More industry detail for U.S. parents and more industry and country detail for foreign affiliates are also available on the website.

U.S. MNE Activities in the First Year After the Tax Cuts and Jobs Act (TCJA)

The TCJA generally eliminated taxes on dividends, or repatriated earnings, to U.S. multinationals from their foreign affiliates and changed the nominal U.S. domestic corporate tax rate from 35 percent to 21 percent beginning on January 1, 2018. BEA’s statistics cannot separate the effects of the TCJA from other prevalent economic conditions and company-specific factors in 2018, however, the statistics on the Activities of U.S. MNEs for 2018 in this release provide a first look at U.S. MNE activities in the year after the TCJA took effect.

U.S. parents grew faster than MOFAs in 2018 for several measures of their activities, including employment, value added, expenditures for property, plant, and equipment (PP&E), and research and development expenditures (R&D). This contrasts with the long-term trend of MOFA activities growth outpacing that of U.S. parents. In 2018, U.S. parents experienced above-average growth rates for these measures, while MOFAs grew at below-average rates.

Annual Percent Change in Activities of U.S. MNEs

U.S. Bureau of Economic Analysis
*1998-2018, rates for benchmark years (1999, 2004, 2009, and 2014) not included

In addition to the measures of MNE activities featured in this release, BEA’s U.S. MNE statistics include U.S. income taxes paid by U.S. parents. According to the statistics, U.S. income taxes paid by U.S. parents decreased 6.4 percent to $218.9 billion in 2018 (see Table I. P1). The effective U.S. income tax rate paid by U.S. parents decreased to 13.1 percent in 2018, following an effective rate of 15.4 percent in 2017 and between 18.4 and 22.3 percent for the five previous years.