Investors are constantly deluged by releases of new economic data. Although many market commentaries refer to these releases as though they explain why the stock market rose or fell on that particular day, few of them explain what the releases mean in and of themselves. Many professional economists make predictions about what they believe a particular release of economic data will indicate, and journalists point to the fact that a particular number was better or worse than expected as a major factor in the market's movement.

New information does give investors guidance in evaluating their strategies, so it makes sense that any new data may move market prices. However, it's important to understand the implications that a set of new economic data has on the overall economy. For instance, today's release of the U.S. current account figures for the second quarter of 2006 will undoubtedly find its way into many news stories. To understand more clearly what the current account figures indicate about the U.S. economy, on the other hand, you have to go beyond the news stories and learn about what the figures themselves mean.

The basic concept
In general, current account information gives an overall summary of international commerce between parties in the United States and parties elsewhere in the world. In order to calculate the current account data, also known as the balance of payments, the Bureau of Economic Analysis measures the value of goods, services, income, capital, and other payments moving between the United States and the rest of the world. By comparing these values, economists draw conclusions about the health of the U.S. economy and its relative strength in comparison to other countries.

The most popular piece of current account data compares the values of goods and services imported into the United States with those of goods and services exported to the rest of the world. Historically, the value of imports into the United States has exceeded the values of U.S. exports, so the resulting negative number is often called the trade deficit. Although exports have tended to rise from quarter to quarter, imports have grown at a much faster pace, so the overall imbalance has become more extreme both in absolute dollar terms and in relative terms.

However, the current account incorporates more than just international trade of goods and services. The BEA also releases information about the flow of income and capital between the U.S. and other countries. For instance, if Ford (NYSE:F) owns an auto plant abroad and receives income from those assets, then those income payments are included in the overall income flow into the U.S. Similarly, if Honda (NYSE:HMC) owns an auto plant inside the U.S. and receives income, then the income payments represent an outflow of money from the U.S. and are included in the current account data. In addition, the BEA also measures the net change in both U.S. assets held by foreign owners and foreign assets held by U.S. owners, as well as the net amount of foreign aid and other miscellaneous payments between countries.

Today's release
The current account data released today indicates that the overall current account deficit rose to $218.4 billion in the second quarter of 2006. The value of imported goods and services exceeded the value of exported goods and services by $193.8 billion in the second quarter, up from a revised $191.1 billion in the first quarter. The total amount of foreign assets held by U.S. owners rose by $212.3 billion, while the total amount of U.S. assets held by foreigners rose by $366.4 billion.

Economists had expected the current account deficit to be about $213 billion. Although traders may use the disparity to justify making new trades, the size of the disparity is small enough to be inconsequential in economic terms. In a $13 trillion economy, $5 billion is a drop in the bucket.

Economic implications
Economists have strong differences of opinion about the importance of current account data. However, none can dispute that the data clearly reflects the increasing global nature of economic activity. Since 1960, the first year for which BEA has data on international transactions, the value of foreign assets held by U.S. owners has risen by nearly $7 trillion, while the value of U.S. assets held by foreign owners has risen almost $12 trillion.

Another often-unnoticed result: While the U.S. imports more goods than it exports, it generally exports more services than it imports. For instance, in the second quarter, U.S. exports of services exceeded imports by $16.8 billion. Industries providing substantial service exports include financial-services companies like Goldman Sachs (NYSE:GS) and consultants like Accenture (NYSE:ACN). Although this number is relatively small compared to the overall trade deficit, it supports the assertion that the U.S. has remained more competitive in providing global services than in producing and exporting goods globally.

Because the current account data focuses on international transactions, new data releases often have their most visible impact on foreign currency exchange markets. In theory, the United States' purchase of a greater value of goods from abroad than it sells to foreign buyers means that more U.S. dollars are held internationally. However, the impact this has on foreign exchange depends on what those foreign entities do with the U.S. currency. If the foreign entities choose to buy U.S. assets with their dollars, then the currency will return to the U.S. economy and exchange rates may be relatively unaffected. On the other hand, if foreign purchases of U.S. assets slow, then a fall in the value of the U.S. dollar abroad may result, which generally makes imported goods more expensive for U.S. consumers. Some people believe that this slowing has already occurred, causing the steep decline in the U.S. dollar over the past few years. The data, however, do not suggest this, showing net increases in foreign investment in U.S. assets of over $1 trillion annually in 2004 and 2005.

In summary, although current account figures provide ominous headlines, it remains unclear whether or not the doomsday scenarios proposed by some economists will come to pass. That's another common characteristic of economic data: Even a reasonable-sounding explanation of the data isn't necessarily correct.

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Fool contributor Dan Caplinger believes in looking beyond the headlines. He doesn't own any of the companies mentioned in this article. The Fool's disclosure policy is always easy to understand.