Review

The economy began a recovery in the second quarter of 1975 and made significant advances in its first year. In the last two quarters, however, the pace of economic activity has been less robust. The economy’s performance in this most recent period has triggered a great deal of concern over the sustainability of the recovery. These fears have probably been intensified by a number of considerations, including the fact that the unemployment rate has risen recently—a development not generally observed at this point in a recovery.

The purpose of this article is to review U.S. international trade and financial developments for the year 1976. However, because much of the data relating to these developments are not available beyond the second quarter of 1976, the review is limited in this respect. Since this same limitation was encountered in the Review article which examined international transactions for the year 1975, the events of the last half of 1975 will be briefly recounted here. Of particular importance is the pattern of international transactions, their impact on the U.S. economy, and consideration of the movement of exchange rates between the U.S. dollar and other major currencies.