The balance of goods and services has fluctuated since 1947 and has been particularly sensitive to events such as the Korean War and the Suez Crisis. The Korean War reduced the current account surplus from more than 5 billion dollars in 1948 and 1949 to 1.3 billion in 1950. The expansion of European demand in 1951, still influenced by the same conflict, supported American exports, raising the surplus to 3.3 billion. The European recession of 1952 reduced it again to 1.8 billion. From 1954 onward, the surplus increased, reaching 5.2 billion in 1957. Despite rising military expenditures abroad, the overall deficit of 2.2 billion in 1953 was replaced by a surplus of 500 million in 1957. This improvement resulted from increased purchases of American oil following the blockage of the Suez Canal and European demand for capital goods during a period of strong investment growth.
Alongside these improvements, there was a significant increase in long-term private capital outflows. Between 1951 and 1955, the net balance of these outflows never reached 1 billion dollars. In 1955 it rose to 700 million, but the following year it reached 2 billion; in 1957 it rose to 2.9 billion, and in 1958 to 2.6 billion. The recession of 1958 caused a sharp decline in American exports of goods and services, reducing the surplus from 5.2 billion in 1957 to 1.2 billion in 1958 and eventually turning into a deficit of 400 million in 1959. At the same time, the overall balance, which had been exceptionally positive in 1957, became strongly negative from 1958 onward. Between 1957 and 1958, the deterioration of the overall balance reached 4 billion dollars.
In 1959, a strike in the American steel industry led to a considerable increase in steel imports, contributing to the deficit in the balance of goods and services. The reduction of 1 billion dollars in net private foreign investment slowed the growth of the overall deficit, which nonetheless reached 3.7 billion. In 1961 and 1962, the balance of payments improved significantly due to strong surpluses in goods and services transactions—5 billion in 1961 and 4.3 billion in 1962—despite the growth of foreign investment and external aid. The main cause of the U.S. balance of payments deficit lies in private capital investment abroad, which increased by an average of 1.7 billion dollars annually between 1958–1960 compared to the period 1953–1955.
However, this analysis may be misleading. A study by the Brookings Institution points to feedback effects from foreign investments and government aid on U.S. trade. Part of the capital invested abroad finances imports from the United States, generating a return effect that benefits the balance of payments. Measuring this impact is difficult, particularly when considering its broader influence on global imports. An increase in U.S. demand for raw materials may raise prices, boosting foreign exchange earnings for exporting countries—often developing economies—whose import capacity depends on such income. Consequently, additional U.S. spending on raw material imports may, with some delay, lead to increased exports from the United States.
A similar logic applies to the effects of foreign aid provided for economic or military purposes. It should also be noted that income from foreign investments rises with the total volume of capital invested, increasing from an average of 1.7 billion dollars annually between 1953–1955 to 2.2 billion between 1958–1960. Conversely, negative feedback effects also exist: since exported goods often incorporate imported inputs, an increase in exports may lead to an increase in imports. These interactions are difficult to measure but are essential for identifying effective ways to reduce the overall U.S. balance of payments deficit.