Few Questions on Economic issues

Discussion in 'Economics' started by MrProfit, Jul 24, 2007.

  1. MrProfit

    MrProfit

    I would truly appreciate if someone answered few of my questions:

    1. How does "seasonal adjustment" works on trade balance data provided by the
    US Census Bureau and Bureau of Economic Analysis? Which data should we consider as usefull - adjusted or not adjusted? Why is this being adjusted? What for?

    Reasons for the question:
    The 2006 annual data from here:
    http://www.census.gov/foreign-trade/statistics/historical/go....
    shows -838,271 BOP Basis
    -817,304 Census Basis
    Why the difference and what that means? I understand Balance of Payment method but what the "Census" means? How is it collected?

    now - annual data from here:
    http://www.census.gov/foreign-trade/statistics/historical/ga....
    shows Annual -758,522 Seasonally Adjusted
    Again - Why the difference and what that means?

    If we subtract the two of the numbers (758 and 838) we get a large difference annually (79,749 billions USD). In my opinion it is fundamentally important to understand why these numbers are adjusted. Unfortunatelly I can't find apropriate explanations anywhere. Please explain.


    2. Second question is related to the first. If we list the current account deficit starting from the very important past date of March 2006 we get the following numbers:
    2006:
    March -68,293
    April -68,598
    May -72,035
    June -70,643
    July -73,733
    August -74,272
    September -70,894
    October -65,492
    November -66,256
    December -68,590
    2007:
    January -64,624
    February -65,500
    March -70,742
    April (R) -67,345
    May -68,999

    Total of the above is: 1,036,016 = 1 Trillion dollars!

    I used the above data from here:
    http://www.census.gov/foreign-trade/Press-Release/current_pr....

    Now if we look at the TICS report from here:
    http://www.ustreas.gov/tic/ticpress.shtml
    (I used the archive file - http://www.ustreas.gov/tic/npr_history.csv)
    You will see the following numbers for the same period March 2006 - May 2007:
    2007-May 105909
    2007-Apr 97763
    2007-Mar 32250
    2007-Feb 95537
    2007-Jan 80540
    2006-Dec 15
    2006-Nov 87870
    2006-Oct 78050
    2006-Sep 70984
    2006-Aug 104359
    2006-Jul 72959
    2006-Jun -2640
    2006-May 105087
    2006-Apr 101565
    2006-Mar 95926
    Totaling 1,126,174 = 1.126 trillion

    Therefore we must assume that based on official statistics we have NET inflow of 1,126,174 millions and outflow of 1,036,016 millions USD for the same period.

    Now questions:
    Why do we see the difference in the amount of 126 billions of US dollars?
    Where is this money coming from?

    Last time the FED published the amount of dollars OUTSIDE the US (so called eurodollars) here:
    http://www.federalreserve.gov/releases/h6/20060316/
    there were 425.5 billions of dollars outside of the Domestic Banking system.
    Look at H.6 (508); Table 6; SEASONALLY ADJUSTED COMPONENTS OF NON-M2 M3; last line Eurodollars(4).

    Now if we have a discrepancy of 126 billion over the total of 425.5 billion - it is logical to assume that the change of that would definitely change the value of USDX causing it to increase in value over the period of time.
    BUT WE DO NOT OBSERVE THAT. Period.
    What is more important - should the foreign eurodollar deposits decrease - the LIBOR rate would increase, right?

    BUT WE DO NOT OBSERVE ANY SIGNIFICANT FLUCTUATIONS IN LIBOR RATE FOR USD!
    http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=141&a=627
    THEREFORE IT IS LOGICAL TO ASSUME (with high probability) THE EURODOLLAR DEPOSITS DID NOT CHANGE SIGNIFICANTLY - even though we can't say for sure because FED stopped reporting these in March 2006.

    Bottom line - WHERE DOES THAT MONEY COME FROM AND WHERE IS IT OFFICIALLY REPORTED?
     
  2. MrProfit

    MrProfit

    I guess I expected too much...