BEA’s Initiative to Expand and Reconcile Trade in Services Statistics: New Detail for Improved Analysis

The industrial composition of output in the United States and other advanced economies has been evolving rapidly away from goods toward services. Jensen (2011, p. 14) estimates that, for the United States, “whereas in 1960 the business service sector employed only half as many workers as the manufacturing sector, by 2007 business services employed just over twice as many.” For U.S. international transactions, growth in services exports is increasingly important to the U.S. economy and the trade balance. Exports of services represented 34 percent of total U.S. exports and led to a $249 billion surplus in services trade in 2016. These patterns in the composition of U.S. output and international trade partly reflect the increased geographic fragmentation of production evidenced by global value chains (GVCs), in which U.S. firms seek to capture a higher share of value in production by specializing in high-value activities, such as research and development (R&D) and engineering. Therefore, this evolution of the U.S. economy toward services, particularly business services, can contribute to higher wages, higher output, and improved standards of living in the United States.