Tag Archives: Exports

Why This Counts: What are the U.S. Import and Export Price Indexes?

Cargo ship in port at nightThe U.S. Bureau of Labor Statistics provides data of all kinds for workers, jobseekers, students, employers, investors, and policymakers. Most BLS measures provide information on U.S. labor markets and living conditions: the national labor force participation rate; the unemployment rate in Illinois; the Consumer Price Index for Anchorage, Alaska. But did you know we also provide international data? With a focus on global trade, we publish the U.S. import and export price indexes.

What are import and export prices indexes?

Import and export price indexes describe changes in the prices for goods and some services exchanged between people and businesses in the United States and trading partners around the world. BLS collects prices of imported and exported products from businesses and calculates price trends monthly.

A brief history of international prices:

  • BLS published the first import and export price indexes in 1973.
  • We published the first all-goods price indexes for imports in 1983 and for exports in 1984.
  • Monthly publication launched in 1989 and expanded in 1994.
  • Import price indexes by country of origin began publication in 1992.

What is an import? An export?

To measure import and export prices, we first need to define “import” and “export.” An import is any product entering the United States from a foreign country; an export goes the opposite direction. A good becomes an import or export when it crosses the border. An imported service is bought by a U.S. resident from a foreign resident, while an exported service is sold by a U.S. resident to a foreign resident.

What is a price index?

A price index measures the average change in prices for a basket of the same products over time. We measure price changes for thousands of imports and exports each month. We publish these price changes for specific products and for the specific industries and U.S trading partners that import or export the products. To learn more about price indexes, see our blog about the Producer Price Indexes.

How do we collect the data?

Like the Consumer Price Index and Producer Price Indexes, the import and export price indexes depend on the cooperation of businesses—in this case, U.S. establishments importing and exporting goods and services. Thousands of public-minded businesses voluntarily provide data through a monthly survey. With all the data we collect, we strive to minimize the burden on our respondents and protect their confidentiality and privacy.

What do import and export prices measure?

If you’ve ever taken an introductory economics course, you know markets determine price changes through supply and demand. On the most basic level, import and export price indexes measure how supply and demand affect prices for goods and services traded internationally. Let’s look at a quick example, the export price index for computers. A U.S. computer manufacturer may look at current trends to figure out short-term sales strategies. Then consider the flip side—the price index for import computers. A U.S. resident shopping for a new computer may want to research whether prices have risen or fallen over the past few months. Or that computer shopper might look at the data from the past few years to see if there is a certain time of year that prices fall. But the importance of import and export prices extends even further than individuals and companies.

  • The indexes are used to account for inflation in other official U.S. statistics like trade balances published by the Census Bureau and the international accounts for U.S. Gross Domestic Product published by the Bureau of Economic Analysis.
  • When economists calculate measures of U.S. industries’ competitiveness compared with our trading partners, they use import and export price indexes.
  • A change in the import price index can tilt domestic inflation in the same direction.
  • When exchange rates between currencies rise and fall, the indexes can show how much of that change is “passed-though” to an import or export price.

Why do import and export price indexes data matter?

The data matter because U.S. consumers depend on imports! Simply put, many of the products sold to consumers in the United States are imported from abroad. And there is a good chance what you buy for your home depends on import prices. But consumers aren’t the only ones who care about these prices. U.S. producers sell abroad and buy from overseas. Producers care about import prices because many imports to the United States go into the goods and services produced domestically. U.S. auto manufacturers care about the prices of auto parts they import from abroad. Producers who export goods to foreign countries benefit from having access to price information. Knowing trends in export agricultural prices, for example, could influence what crops a U.S. grower chooses to produce.

Want to find out more?

President’s 2016 budget would fund data on export prices and poverty measures

A few weeks ago President Obama presented his fiscal year 2016 budget request to Congress. That budget proposes $632.7 million in funding for BLS, an increase of $40.5 million over our fiscal year 2015 funding. The 2016 budget proposes new funding to help BLS meet some important data needs. I have asked David Friedman, the acting Associate Commissioner for Prices and Living Conditions, to explain how we plan to use the proposed funding to improve prices and consumer spending information.

The President’s 2016 budget asks Congress to restore funding that would let BLS continue producing and publishing export price indexes. These indexes measure the price change of goods and services U.S. firms sell to foreign buyers. In fiscal year 2014, we announced plans to stop publishing export price indexes because of reduced funding. However, before we carried out the planned cuts, the Administration looked for and found other temporary funding sources. This money is only enough to produce and publish export price indexes until September 30, 2015. This budget proposal would allow us to continue producing and publishing export price indexes in fiscal year 2016 and beyond.

BLS publishes import and export price indexes, and both are critical for understanding how our nation’s economy connects to the world economy. Export price indexes help policymakers and businesses understand trends in trade balances and how well U.S. firms compete in international markets. The Bureau of Economic Analysis uses export price indexes to estimate real Gross Domestic Product, which measures all the goods and services the nation produces. BLS measures of productivity and costs also rely on export price indexes. A recent Beyond the Numbers article showed that no other data sources are substitutes for export price indexes.

The President’s 2016 budget also proposes funds for BLS to produce spending measures that would help the U.S. Census Bureau measure poverty more accurately. Poverty measures are essential for understanding hardship and prosperity in our economy. Other federal agencies use these measures to improve conditions for the poor. The official U.S. poverty measure began in the 1960s and has not changed substantially since then. Many observers have criticized the measure for several flaws. In particular, it does not account for many government aid programs. The alternative poverty measures the Census Bureau would produce from BLS spending data would not replace the official measure; instead they would provide a broader view of hardship. If Congress funds this proposal, it would allow us to:

  1. Release consumer spending data more quickly to help the Census Bureau produce alternative poverty measures each year.
  2. Add questions to the Consumer Expenditure Survey on topics such as school breakfasts and lunches and help paying for home heating and other household expenses.
  3. Continue research to improve how federal agencies measure poverty.

If Congress funds the BLS proposal in the coming year, it would allow us to strengthen our partnership with the Census Bureau on this important national issue. Without the funding, our ability to be a full participant in development and maintenance of the supplemental poverty measure is not possible.