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The U.S. net international investment position at yearend 2011 was -$4,030.3 billion (preliminary), as the value of foreign investment in the United States continued to exceed the value of U.S. investment abroad (table 1). At yearend 2010, the U.S. net international investment position was -$2,473.6 billion (revised). The -$1,556.7 billion change in the U.S. net investment position from yearend 2010 to yearend 2011 was mainly attributable to net price changes of -$802.1 billion and net financial flows of -$556.3 billion. Highlights for 2011: * Increases in the prices of U.S. Treasury bonds and declines in foreign stock prices raised the value of foreign investment in the United States and lowered the value of U.S. investment abroad. * The impact of changes in U.S. and foreign asset prices of -$802.1 billion accounted for over half of the -$1.6 trillion change in the U.S. net international investment position. * Most of the rest of the change in the U.S. net international investment position reflected foreign acquisitions of U.S. assets (including over $400 billion in U.S. Treasury securities) that exceeded U.S. acquisitions of foreign assets. U.S. acquisitions of foreign assets were reduced by an unusual decline in U.S. claims on foreigners as reported by U.S. banks and securities brokers. * The appreciation of the U.S. dollar against a trade-weighted index of major currencies caused a change of -$23.0 billion in the U.S. net international investment position. * The U.S. net international investment position was equal to 2.6% of the value of all U.S. financial assets at the end of 2011, up from 1.6% in 2010, and up from the recent peak of 2.3% in 2008./1/ ____________________________________________________________________________________ Revisions The U.S. international investment position statistics released today have been revised for 2009 and 2010. The previously published U.S. net international investment position at yearend 2010 was -$2,471.0 billion. Revisions to the U.S. net international investment position were $74.7 billion for 2009 and -$2.6 billion for 2010. The revisions reflect newly available data from the Annual Survey of Foreign Portfolio Holdings of U.S. Securities at end-June 2011 and the Annual Survey of U.S. Ownership of Foreign Securities at end-December 2010 conducted by the Federal Reserve System and the U.S. Treasury Department. The revisions also reflect other newly available and revised data from the Treasury International Capital reporting system and from BEA's surveys of direct investment. The July SURVEY OF CURRENT BUSINESS will contain an article with a more detailed discussion of the U.S. net international investment position at yearend 2011 and revised historical data. That issue will also contain an article about direct investment positions valued at historical-cost and revised historical data on direct investment with detail by country and industry. In July BEA will also release on its Web site detailed investment position statistics presented in table 1 of this release for 2003-2008 and revised statistics for 2009-2010. ____________________________________________________________________________________ Financial flows Net financial flows of -$556.3 billion resulted from U.S. acquisitions of financial assets abroad (excluding financial derivatives) of $483.7 billion, less foreign acquisitions of financial assets in the United States (excluding financial derivatives) of $1,001.0 billion, plus net financial flows from financial derivatives of -$39.0 billion. U.S. acquisitions of financial assets abroad, excluding financial derivatives, were $483.7 billion, down from $939.5 billion in 2010. In 2011, U.S. official reserve assets, U.S. government assets other than official reserve assets, and direct investment abroad increased, and U.S. purchases of foreign securities exceeded sales. These financial outflows were partly offset by decreases in claims of U.S. banks and securities brokers on foreign residents. Foreign acquisitions of financial assets in the United States, excluding financial derivatives, were $1,001.0 billion, down from $1,308.3 billion in 2010. In 2011, foreign official assets in the United States, U.S. banks’ and securities brokers’ liabilities to foreign residents, and foreign direct investment in the United States increased, and foreign purchases of U.S. Treasury securities exceeded sales. These financial inflows were partly offset by foreign sales of U.S. corporate and agency bonds that exceeded purchases. Valuation adjustments Valuation adjustments included -$802.1 billion from price changes, -$23.0 billion from exchange-rate changes, and -$175.3 billion in other changes. Price changes led to a -$802.1 billion change in the U.S. net international investment position, reflecting price decreases in the value of U.S. holdings of foreign stocks and price increases in the value of foreign holdings of U.S. debt securities. These price changes were partly offset by increases in the value of the U.S. gold stock as the market price of gold continued to climb. Exchange-rate changes led to a -$23.0 billion change in the U.S. net international investment position, reflecting depreciation in the foreign exchange index of major foreign currencies against the U.S. dollar from yearend 2010 to yearend 2011 that lowered the dollar value of U.S.-owned assets abroad. It also lowered the dollar value of foreign-owned assets in the United States denominated in foreign currencies, but by a smaller amount. Other statistical changes led to a -$175.3 billion change in the U.S. net international investment position. In 2011, other valuation changes included more complete reporting of the Treasury International Capital position data, the incorporation of new reporters from the U.S. Treasury Department’s June 2011 survey of foreign portfolio holdings of U.S. securities, capital gains and losses from the sale of direct investment assets, and other adjustments to source data. Investment positions at yearend 2011 U.S.-owned assets abroad increased $834.0 billion to $21,132.4 billion. Financial derivatives held as assets increased $1,052.4 billion to $4,704.7 billion, mainly due to increases in U.S. claims from single-currency interest rate swaps. U.S. official reserve assets increased $47.4 billion to $536.0 billion, as a result of price appreciation of the U.S. gold stock and the increased U.S. reserve position in the International Monetary Fund. U.S. government assets other than official reserve assets increased $103.7 billion to $178.9 billion, mainly as a result of increases in U.S. foreign currency holdings from central bank liquidity swaps between the U.S. Federal Reserve System and foreign central banks. The stock of U.S. direct investment abroad at current cost increased $374.7 billion to $4,681.6 billion, mainly due to especially strong financial outflows that were mostly accounted for by reinvested earnings. (See the box on page 5 for a description of direct investment valuation methods.) U.S. holdings of foreign securities decreased $414.4 billion to $5,922.0 billion, as a result of price decreases of foreign stocks. Claims on foreigners reported by U.S. banks and securities brokers decreased $251.8 billion to $4,312.4 billion. Claims on foreigners reported by U.S. nonbanks decreased $77.9 billion to $796.8 billion. Foreign-owned assets in the United States increased $2,390.6 billion to $25,162.6 billion. Financial derivatives held as liabilities increased $1,036.5 billion to $4,578.4 billion, mainly due to increases in U.S. liabilities from single-currency interest rate swaps. Foreign official assets in the United States increased $338.1 billion to $5,250.8 billion, mostly as a result of net purchases and price appreciation of U.S. Treasury securities. Foreign private holdings of U.S. Treasury securities increased $316.2 billion to $1,418.1 billion, mostly as a result of strong net purchases. Liabilities to private foreign residents reported by U.S. banks and securities brokers increased $313.4 billion to $4,011.6 billion. The stock of foreign direct investment in the United States at current cost increased $311.1 billion to $2,908.8 billion; mainly due to financial inflows that were mostly accounted for by net equity investment and reinvested earnings (see the box below). Foreign private holdings of U.S. securities other than U.S. Treasury securities increased $34.2 billion to $5,968.2 billion, as increases in prices, mostly of U.S. bonds, were partly offset by net sales. Liabilities to private foreign residents reported by U.S. nonbanks decreased $13.9 billion to $629.7 billion. The stock of U.S. currency abroad increased $55.0 billion to $397.1 billion. ____________________________________________________________________________________ Valuation Methods for Direct Investment Direct investment at current cost is BEA's featured measure of direct investment in current-period prices. The current-cost method values the U.S. and foreign parents' share of their affiliates' investment in plant and equipment using the current cost of capital equipment, in land using general price indexes, and in inventories using estimates of their replacement cost. Direct investment at market value is an alternative measure of direct investment in current-period prices. The market-value method values the owners' equity component of the direct investment position using indexes of stock market prices. Direct investment positions at market value are presented in the memoranda of table 1 of this release. The historical-cost method values assets and liabilities at their book values. Country and industry detail can be shown only under this method. Statistics on this basis are not presented in this release, but are available on BEA's Web site at www.bea.gov/international/di1usdbal.htm for U.S. direct investment abroad and www.bea.gov/international/di1fdibal.htm for foreign direct investment in the United States. ____________________________________________________________________________________ * * * BEA’s national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA’s Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries (http://www.bea.gov/_subscribe/index_vocus.htm) of BEA releases and announcements. ____________________________________________________________________________________ 1. Board of Governors of the Federal Reserve System (FRS), Flow of Funds Accounts of the United States, Flows and Outstandings, First Quarter 2012, Release Z.1. Statistical Release (Washington, DC: FRS, June 7, 2012) Table L.5, page 66. According to June 2012 Z.1 release, the value of all U.S. financial assets was $156,861.7 billion at the end of 2011. U.S. assets abroad from the international investment position were $21,132.4 billion at the end of 2011, 13.5% of all U.S. assets, up from 13.2% in 2010, but down from the 13.8% series peak in 2008. NOTE: This news release is available on BEA’s Web site (www.bea.gov) along with Highlights(http://www.bea.gov/newsreleases/international/intinv/2011/pdf/intinv11_fax.pdf) related to this release, the latest detailed statistics (http://www.bea.gov/international/index.htm#iip) for U.S. international transactions, and a description of the estimation methods (http://www.bea.gov/scb/pdf/2010/02 February/0210_guide.pdf) used to compile them.