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Real net exports grew sharply in early 1988, but changes are erratic and earlier strong quarters did not lead to lasting gains. Key constraints include limited further dollar depreciation, delays in exchange-rate effects, and services trade deterioration linked to large U.S. current-account deficits and rising investment income outflows.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/merchandise-trade-and-the-outlook-for-1988-trade-forecast-analysis/324735/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/merchandise-trade-and-the-outlook-for-1988-trade-forecast-analysis/324735.png","ImageObject",300,407,{"name":92,"@type":93},"Levi","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-14","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":44},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"Why do many 1988 net export forecasts rely on a large increase in net exports?","Question",{"text":112,"@type":113},"Forecasts assume a major rise in real net exports will substantially fuel overall economic growth in 1988.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"What evidence suggests the forecasts for 1988 net export improvement may be too optimistic?",{"text":117,"@type":113},"The document notes that net export deficits were stubborn and that earlier forecasts for improvements in 1986 and 1987 proved much too optimistic, indicating a wide margin of error.",{"name":119,"@type":110,"acceptedAnswer":120},"How could the services trade balance undermine merchandise trade gains?",{"text":121,"@type":113},"Last year’s merchandise trade improvement was partially offset by a deterioration in the services trade balance, driven by large U.S. current-account deficits and net foreign capital inflows that increase foreign investment earnings in the U.S. faster than U.S. earnings abroad.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},324735,1790141708,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":44,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},7971461740909,"https://ap-avatar.wpscdn.com/davatar_155a257f0dc6eb9ab79c44ca47cae57d","# Merchandise Trade andthe Outlook for 1988\n\nby Gerald H.Anderson  \nMos forecas for growch oftheeconomy in 1988 depend heavily onthe expectation that there will be amajor increase in net exports.Al-though real net exports have been in-creasing significantly,and made astrong gain in the first quarter of1988,there are some important obsta-cles to achieving the degree of im-provement that some of the forecastscall for.  \nReal net exports increased by$16 bil-lion in 1987,but most forecasts for1988 expect increases of nearly twiceto more than four times that amount.For example,21 economists who metin April at the Fourth Federal ReserveDistrict Business Economists Round-table generally look for a$34 billionrise in real net exports that will con-tribute 40 percent of the total growthexpected in the economy in 1988.Other economists have similar expec-tations.The Blue Chip EconomicIndicators panel of 52 forecastersexpect a $45 billion increase,whileone private consultant,Data ResourcesIncorporated(DRI),expects a $69 bil-lion rise in real net exports.  \n■ Too Optimistic  \nWhile further growth in net exports iscertainly likely this year,it may be difficult to achieve the tripling or quad·rupling of last year's improvement that  \nis included in many forecasts.Afterall,the net exports deficit has beenremarkably stubbom and most fore-casts for improvement in 1987 and1986 turned out to be much too opti-mistic.This record of persistent over-estimation suggests that the margin oferror around net exports forecasts isquite wide.Thus,it is not unreason-able to expect that many forecasts for1988 also may be too optimistic.  \nReal net exports reached a low pointin 1986 third quarter,about a yearand half after the dollar reached itspeak and began to depreciate in early1985.Between 1986 fourth quarterand 1987 fourth quarter,real netexports rose by$16.0 billion(table  \n1).However,al of that improvementoccurred in the first quarter of 1987;during the remainder of the year,there was little change.Real netexports rose $16.7 billion in the firstquarter of 1988.That strong perfor-mance has caused some analysts toconclude that the economy is on itsway to a very large improvement inreal net exports this year.However,analysts could have come to the sameconclusion after last year's big first-quarter gain,and they would havebeen wrong.Changes in real netexports tend to be erratic,so judge  \nWill this year's improvement in U.S.foreign trade be double,triple,oreven quadruple last year's gain?Manyforecasters think this will happenand are expecting that a majorgrowth of real net exports will fuelfurther expansion of our economy.There are many factors,however,working against trade improvementof this magnitude,making it unlikelythat the expectations of the moreoptimistic of these forecasters willbe met.  \nments about likely improvementshould be made by looking at under-lying influences rather than at thechanges in the most recent quarter.  \nFurther depreciation of the foreign-exchange value of the dollar mostlikely will not be an important sourceof trade improvement this year.Of theforecasts cited above,only the onefrom DRI is explicit about the dollar.DRI looks for the dollar to depreciateslightly less in 1988 than in 1987.Cer-tainly there is no consensus amongforecasters for greater depreciation  \nthis year,and the governments of themajor nations seem to have a strongcommitment to avoid much furtherdepreciation of the dollar.  \nIn the first quarter of thisyear,the dol-lar depreciated only moderately(table  \n2).Even if thedollar were to depre·ciate substantially in the remainder ofthe year,the considerable delay be-tween exchange-rate change and itseffect on the real trade balance arguesthat further depreciation willnot be astronger source of trade improvementin 1988 than it was in 1987.  \nLast year's improvement in real merchandise trade was partially offset bya$1.5 billion deterioration of the ser-vices trade balance,which droppedanother $2.8 billion in 1988 first","cbCait2NFsSFKssl","https://ap.wps.com/l/cbCait2NFsSFKssl","pdf",1144555,"English","# ■ Implications\n## Net exports forecast feasibility\n## Role of the dollar and exchange rates\n## Services trade balance and investment income","[{\"question\":\"Why do many 1988 net export forecasts rely on a large increase in net exports?\",\"answer\":\"Forecasts assume a major rise in real net exports will substantially fuel overall economic growth in 1988.\"},{\"question\":\"What evidence suggests the forecasts for 1988 net export improvement may be too optimistic?\",\"answer\":\"The document notes that net export deficits were stubborn and that earlier forecasts for improvements in 1986 and 1987 proved much too optimistic, indicating a wide margin of error.\"},{\"question\":\"How could the services trade balance undermine merchandise trade gains?\",\"answer\":\"Last year’s merchandise trade improvement was partially offset by a deterioration in the services trade balance, driven by large U.S. current-account deficits and net foreign capital inflows that increase foreign investment earnings in the U.S. faster than U.S. earnings abroad.\"}]","Merchandise Trade and the Outlook for 1988 - Trade Forecast Analysis | PDF",1789968732,13]