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EMBARGOED UNTIL RELEASE AT 8:30 a.m. EDT, Thursday, June 22, 2023

BEA 23–25

U.S. International Transactions, 1st Quarter 2023 and Annual Update

Current-Account Deficit Widens by 1.5 Percent in First Quarter

Current-Account Balance

The U.S. current-account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $3.1 billion, or 1.5 percent, to $219.3 billion in the first quarter of 2023, according to statistics released today by the U.S. Bureau of Economic Analysis (BEA). The revised fourth-quarter deficit was $216.2 billion.

The first-quarter deficit was 3.3 percent of current-dollar gross domestic product, up less than 0.1 percent from the fourth quarter.

The $3.1 billion widening of the current-account deficit in the first quarter primarily reflected an expanded deficit on secondary income and a reduced surplus on primary income that were partly offset by a reduced deficit on goods.

Quarterly U.S. Current-Account and Component Balances

Current-Account Transactions (tables 1–5)

Exports of goods and services to, and income received from, foreign residents increased $16.0 billion to $1.15 trillion in the first quarter. Imports of goods and services from, and income paid to, foreign residents increased $19.1 billion to $1.37 trillion.¹

Quarterly U.S. Current-Account Transactions

Trade in goods (table 2)

Exports of goods increased $8.9 billion to $526.6 billion, reflecting increases in consumer goods, mostly medicinal, dental, and pharmaceutical products, and in other general merchandise, mostly goods transferred through the Presidential Drawdown Authority.² Partly offsetting was a decrease in industrial supplies and materials, mostly natural gas and petroleum and products. Imports of goods decreased $2.1 billion to $789.7 billion, reflecting a decrease in industrial supplies and materials, mainly petroleum and products and chemicals, that was partly offset by an increase in automotive vehicles, parts, and engines, mainly passenger cars and trucks, buses, and special purpose vehicles.

Trade in services (table 3)

Exports of services increased $3.5 billion to $244.3 billion, and imports of services increased $2.0 billion to $182.2 billion. The increases in both exports and imports primarily reflected an increase in travel, mostly other personal travel.

Primary income (table 4)

Receipts of primary income increased $12.1 billion to $338.6 billion, and payments of primary income increased $18.9 billion to $307.3 billion. The increases in both receipts and payments primarily reflected increases in other investment income, mostly interest on loans and deposits. These increases were mainly due to higher short-term interest rates amid tightening of U.S. and foreign monetary policy.

Secondary income (table 5)

Receipts of secondary income decreased $8.5 billion to $44.5 billion, reflecting a decrease in general government transfers, mainly fines and penalties. Payments of secondary income increased $0.4 billion to $94.1 billion, reflecting an increase in private transfers, mainly insurance-related transfers.

Capital-Account Transactions (table 1)

Capital-transfer receipts increased $20 million to $43 million. Capital-transfer payments increased $2.5 billion to $6.0 billion, reflecting an increase in infrastructure grants, mostly related to goods transferred through the Presidential Drawdown Authority (see footnote 2).

Financial-Account Transactions (tables 1, 6, 7, and 8)

Net financial-account transactions were −$326.8 billion in the first quarter, reflecting net U.S. borrowing from foreign residents.

Quarterly U.S. Financial-Account Transactions Excluding Financial Derivatives

Financial assets (tables 1, 6, 7, and 8)

First-quarter transactions decreased U.S. residents' foreign financial assets by $59.7 billion. Transactions decreased portfolio investment assets, mainly equity, by $263.3 billion. Transactions increased other investment assets by $102.0 billion, as transactions increased loans and decreased deposits; direct investment assets, mostly equity, by $100.8 billion; and reserve assets by $0.8 billion.

Liabilities (tables 1, 6, 7, and 8)

First-quarter transactions increased U.S. liabilities to foreign residents by $265.4 billion. Transactions increased other investment liabilities, mostly loans and deposits, by $140.7 billion; direct investment liabilities, mostly equity, by $118.7 billion; and portfolio investment liabilities by $6.0 billion, as transactions increased long-term debt securities and decreased equity.

Financial derivatives (table 1)

Net transactions in financial derivatives were –$1.7 billion in the first quarter, reflecting net U.S. borrowing from foreign residents.

	Preliminary estimates	Revised estimates
Table A. Updates to Fourth-Quarter 2022 International Transactions Accounts Balances [Billions of dollars, seasonally adjusted]
Current-account balance	–206.8	−216.2
Goods balance	−272.4	−274.1
Services balance	67.3	60.6
Primary income balance	39.3	38.1
Secondary income balance	−41.1	−40.7
Net financial-account transactions	−127.5	−186.6
U.S. Bureau of Economic Analysis

Annual Update of the U.S. International Transactions Accounts

The statistics in this release reflect the annual update of the U.S. International Transactions Accounts. With this update, BEA has incorporated newly available and revised source data and recalculated seasonal adjustments for 2017–2022. This annual update also reflects the incorporation of (1) BEA's 2019 Benchmark Survey of U.S. Direct Investment Abroad, which resulted in revisions to direct investment transactions in financial assets and liabilities and income receipts and payments for 2019–2022, and (2) improved methodology and source data for transfers through the Presidential Drawdown Authority, which resulted in revisions to goods exports, services exports, international cooperation payments in the current account, and investment grant payments in the capital account for 2021 and 2022. A summary of the revisions to high-level aggregates is shown in table 9.

Table B. Newly Available and Revised Source Data: Key Providers and Years Affected

Agency	Data	Years affected
U.S. Bureau of Economic Analysis	Quarterly international trade in services surveys	2020–2022
U.S. Bureau of Economic Analysis	Benchmark, annual, and quarterly direct investment surveys	2019–2022
U.S. Census Bureau	Revised source data for international trade in goods	2020–2022
U.S. Department of the Treasury	Annual portfolio investment surveys	2021–2022
U.S. Department of the Treasury	Quarterly and monthly portfolio and other investment surveys	2020–2022
U.S. Bureau of Economic Analysis

More information on the annual update is available in "Preview of the 2023 Annual Update of the International Economic Accounts" in the Survey of Current Business. Additional information will be provided in the Survey in July. U.S. International Economic Accounts: Concepts and Methods has been updated to reflect changes implemented with this annual update.

Change to the Euro Area

With this release, statistics beginning with the first quarter of 2023 for the area grouping "Euro Area" include Croatia, which adopted the euro as its currency effective January 1, 2023.

Next release: September 21, 2023, at 8:30 a.m. EDT
U.S. International Transactions, 2nd Quarter 2023

¹ U.S. international transactions are presented in current dollars in accordance with international statistical presentation guidelines. For a comparison of current-dollar, or nominal, and inflation-adjusted, or real, measures of international transactions, see "SECTION 4 – FOREIGN TRANSACTIONS" of the National Income and Product Accounts.
² For more information, see "Preview of the 2023 Annual Update of the International Economic Accounts" in the Survey of Current Business.

Full Release & Tables (PDF)

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Release Highlights (PDF)

Historical Comparisons (PDF)

Historical Comparisons (Annual) (PDF)

Quarterly Current-Account Balances (PDF)

Annual Current-Account Balances (PDF)

Technical

Elliot Berg

301-278-9597

Elliot.Berg@bea.gov

Media (BEA)

Connie O’Connell

301-278-9003

Connie.OConnell@bea.gov

Additional Information

Resources

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Historical time series for these estimates can be accessed in BEA's Interactive Data Application.
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For more on BEA statistics, see BEA's online journal, the Survey of Current Business.
For upcoming economic indicators, see BEA's news release schedule.
More information on the International Transactions Accounts (ITAs) and a description of the estimation methods used to compile them is provided in U.S. International Economic Accounts: Concepts and Methods.

Definitions

The current account consists of transactions between U.S. residents and nonresidents in goods, services, primary income, and secondary income.

Goods are physical items with ownership rights that can be exchanged among institutional units through transactions.

Services transactions consist of transactions arising from productive activities that change the condition of the consumer or that facilitate the exchange of products and financial assets.

Primary income transactions include investment income and compensation of employees. Investment income is the return on holdings of financial assets and includes direct investment income, portfolio investment income, other investment income, and income on reserve assets. Compensation of employees is income for the contribution of labor inputs to the production process.

Secondary income consists of current transfers between residents and nonresidents. Unlike an exchange, a transfer is a transaction in which a good, service, or asset is provided without a corresponding return of economic value. Secondary income receipts and payments include U.S. government and private transfers, such as international cooperation (primarily U.S. government grants), U.S. government pensions, fines and penalties, withholding taxes, personal transfers (remittances), insurance-related transfers, and other current transfers.

The capital account consists of capital transfers between residents and nonresidents and the cross-border acquisition and disposal of nonproduced nonfinancial assets. Capital transfers include debt forgiveness, investment grants, and certain disaster-related nonlife insurance claims. Nonproduced nonfinancial assets include the acquisition and disposal of natural resources, outright sales and purchases of franchises and trademarks, and fees paid by one sporting franchise to another for the transfer of a player. Capital-account transactions are distinguished from current-account transactions in that capital-account transactions result in a change in the assets of one or both parties to the transaction without affecting the income or savings of either party.

The financial account consists of transactions between U.S. residents and nonresidents for direct investment, portfolio investment, other investment, reserves, and financial derivatives other than reserves.

Direct investment is a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence over the management of an enterprise resident in another economy. Ownership or control of 10 percent or more of the voting securities of an entity is the threshold for separating direct investment from other types of investment. Direct investment transactions include transactions in equity (including reinvestment of earnings) and debt instruments.

Portfolio investment transactions consist of cross-border transactions involving equity and investment fund shares and debt securities, excluding those included in direct investment or reserve assets.

Other investment is a residual category that includes cross-border financial instruments other than those included in direct investment, portfolio investment, financial derivatives, and reserve assets. Other investment transactions consist of transactions in other equity (equity not in the form of securities), currency and deposits, loans, insurance technical reserves, trade credit and advances, and, for liabilities, special drawing rights allocations.

Reserve assets are those external assets that are readily available to and controlled by monetary authorities for meeting balance-of-payments financing needs, for intervention in exchange markets to affect the currency exchange rate, and for other related purposes, such as maintaining confidence in the currency and the economy and serving as a basis for foreign borrowing. The major published components are monetary gold, International Monetary Fund (IMF) special drawing rights, reserve position in the IMF, and other reserve assets.

Financial derivatives other than reserves consist of financial contracts that are linked to underlying financial instruments, commodities, or indicators. Transactions in financial derivatives consist of U.S. cash receipts and payments arising from the sale, purchase, periodic settlement, or final settlement of financial derivatives contracts. Transactions in financial derivatives are only available as a net value equal to transactions for assets less transactions for liabilities. A positive value represents net cash payments by U.S. residents to foreign residents from settlements of derivatives contracts (net lending), and a negative value represents net U.S. cash receipts (net borrowing).

The statistical discrepancy is the difference between net acquisition of assets and net incurrence of liabilities in the financial account (including financial derivatives) less the difference between total credits and total debits recorded in the current and capital accounts. The statistical discrepancy can also be calculated as the difference between net lending (borrowing) measured from financial-account transactions and net lending (borrowing) measured from current- and capital-account transactions.

The current-account balance is the difference between credits (exports and income receipts) and debits (imports and income payments) in the current account. The balance is a net measure of current-account transactions between the United States and the rest of the world. A positive balance indicates a current-account surplus. A negative balance indicates a current-account deficit.

Net lending (borrowing) measures the balance of funds supplied to the rest of the world. Net lending means that, in net terms, the U.S. economy supplies funds to the rest of the world. Net borrowing means the opposite. Net lending (borrowing) can be measured by current- and capital-account transactions or by financial-account transactions.

Conceptually, the two measures are equal. In practice, the two measures differ by the statistical discrepancy.

Release and update cycle

Preliminary quarterly statistics for the ITAs are released in March, June, September, and December, approximately 80 days after the end of the reference quarter. These statistics are updated the following quarter to incorporate new source data. Additionally, in March, seasonally adjusted statistics for the first, second, and third quarters of the previous year are revised to force the sum of seasonally adjusted quarters to equal the annual totals; this forcing procedure is also incorporated into the preliminary fourth quarter. Quarterly statistics are open for revision for at least the prior 3 years in annual updates released in June. Preliminary annual statistics are released in March, along with statistics for the fourth quarter of the previous year. These annual statistics are open for revision for at least the prior 3 years in subsequent annual updates.

Related statistics

The ITAs constitute one part of a broader set of U.S. International Economic Accounts that, taken together, provide a comprehensive, integrated, and detailed picture of U.S. international economic activities.

The International Investment Position (IIP) Accounts are released quarterly. Financial transactions reported in the ITAs are one type of change in position recorded in the IIP Accounts.

Statistics on direct investment and multinational enterprises (MNEs) include annual statistics on the activities of U.S. MNEs and U.S. affiliates of foreign MNEs, detailed annual and quarterly statistics on direct investment, and annual statistics on new foreign direct investment in the United States.

Statistics on international services, released annually, include detailed annual information on trade in services and on services supplied through the channel of direct investment by affiliates of MNEs.

U.S. international trade in goods and services, released by BEA and the U.S. Census Bureau, provides monthly statistics on trade in goods and services.