FOR IMMEDIATE RELEASE AT 8:30 A.M. EST, MONDAY, DECEMBER 30, 2013
BEA 13-66
U.S. Net International Investment Position: End of Third Quarter 2013

The U.S. net international investment position at the end of the third quarter of 2013 was -$4,165.6 billion (preliminary) as the value of foreign investments in the United States exceeded the value of U.S. investments abroad (table 1). At the end of the second quarter, the U.S. net international investment position was -$4,455.0 billion (revised). The $289.5 billion increase in the net position reflected a $621.5 billion increase in the value of U.S.-owned assets abroad that exceeded a $332.1 billion increase in the value of foreign-owned assets in the United States. The U.S. net position increased primarily as rising foreign stock prices, as well as the appreciation of foreign currencies relative to the U.S. dollar, increased the value of U.S.-owned assets abroad more than the increase in the value of foreign-owned assets in the United States.

The U.S. net international investment position increased 6.5 percent in the third quarter, compared with a 5.2-percent decrease in the second quarter and an average quarterly decrease of 7.6 percent from the first quarter of 2011 through the second quarter of 2013. The net position was equal to 2.2 percent of the value of all U.S. financial assets at the end of the third quarter, down from 2.4 percent at the end of the second quarter.1

U.S.-owned assets abroad were $21,590.9 billion at the end of the third quarter compared with $20,969.4 billion at the end of the second quarter. The $621.5 billion increase reflected a $687.4 billion increase in the value of U.S.-owned assets abroad excluding financial derivatives that was partly offset by a $65.9 billion decrease in the value of financial derivatives.

U.S.-owned assets abroad excluding financial derivatives were $18,831.7 billion at the end of the third quarter compared with $18,144.3 billion at the end of the second quarter. The $687.4 billion increase reflected a $606.6 billion increase resulting from valuation changes and an $80.8 billion increase resulting from financial outflows.2 Valuation changes were mainly attributable to the increase in foreign stock prices that raised the value of U.S. holdings of foreign stocks and also to the appreciation of foreign currencies relative to the U.S. dollar.

Foreign-owned assets in the United States were $25,756.5 billion at the end of the third quarter compared with $25,424.4 billion at the end of the second quarter. The $332.1 billion increase reflected a $385.8 billion increase in the value of foreign-owned assets in the United States excluding financial derivatives that was partly offset by a $53.8 billion decrease in the value of financial derivatives.

Foreign-owned assets in the United States excluding financial derivatives were $23,044.6 billion at the end of the third quarter compared with $22,658.7 billion at the end of the second quarter. The $385.8 billion increase reflected a $230.3 billion increase resulting from valuation changes and a $155.6 billion increase resulting from financial inflows. Valuation changes were mostly attributable to increases in U.S. stock prices that raised the value of foreign holdings of U.S. stocks. The rise in the value of U.S. stocks was partly offset by declines in the value of U.S. Treasury and agency debt due to falling prices. The appreciation of foreign currencies relative to the U.S. dollar had very little impact on the value of foreign-owned assets, which are mostly denominated in U.S. dollars.

Revisions

The U.S. net international investment position at the end of the second quarter of 2013 was revised to -$4,455.0 billion from a previously-published value of -$4,504.1 billion. The $49.1 billion upward revision to the net position reflected a $63.9 billion downward revision to foreign-owned assets in the United States that exceeded a $14.9 billion downward revision to U.S.-owned assets abroad.

U.S.-owned assets abroad at the end of the second quarter were revised to $20,969.4 billion from $20,984.3 billion, and foreign-owned assets in the United States were revised to $25,424.4 billion from $25,488.4 billion. These revisions reflect revised source data from the Treasury International Capital (TIC) reporting system and from BEA’s quarterly surveys of direct investment.

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Valuing the Components of the U.S. International Investment Position

Investment positions for long-term portfolio securities are based on market values from monthly, annual, and benchmark surveys conducted by the Treasury International Capital (TIC) reporting system of the U.S. Department of the Treasury. Investment positions for financial derivatives are based on fair market values from quarterly surveys conducted by the TIC reporting system. Investment positions for claims and liabilities reported by banks, securities brokers, and other nonbanks are based on contractual (face) values of instruments as reported by financial institutions for both their own accounts and the accounts of their customers on the monthly and quarterly surveys conducted by the TIC reporting system with supplementary data for U.S. nonbanks from foreign central banks.

Investment positions for direct investment are valued at current-period prices based on a revaluation of book values. Book values are reported by U.S. multinational companies on surveys conducted by BEA. Direct investment at current cost is BEA’s featured measure of direct investment at current-period prices.3 The current-cost method values the U.S. and foreign parent shares of their affiliates’ investment in (1) plant and equipment using the current cost of capital equipment, (2) land using general price indexes, and (3) inventories using estimates of their replacement cost.4

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Release dates in 2014:

End of the Fourth Quarter and Year 2013 March 26, 2014 (Wednesday)
End of the First Quarter of 2014, Year 2013, and Annual Revisions June 30, 2014 (Monday)
End of the Second Quarter of 2014 September 25, 2014 (Thursday)
End of the Third Quarter of 2014 December 30, 2014 (Tuesday)

BEA’s national, international, regional, and industry statistics; the Survey of Current Business; and BEA news releases are available without charge at www.bea.gov. At the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

NOTE: This news release is available on BEA’s Web site <www.bea.gov> along with Quarterly Highlights related to this release, the latest detailed statistics for the U.S. international investment position, and a description of the estimation methods used to compile them. The third-quarter statistics for 2013 in this release are preliminary and will be revised on March 26, 2014.

1Board of Governors of the Federal Reserve System (FRS), Flow of Funds Accounts of the United States, Flows and Outstandings, Third Quarter 2013, Release Z.1. Statistical Release (Washington, DC: FRS, December 9, 2013) Table L.5, page 11. According to the December 9, 2013 Z.1 release, the value of all U.S. financial assets was $188,503.7 billion at the end of the third quarter. U.S. assets abroad from the international investment position were $21,590.9 billion at the end of the third quarter, 11.5% of all U.S. assets, up from 11.4% in the second quarter and down from the 13.8% series peak in the fourth quarter of 2008.

2For statistics on financial flows, see the financial account transactions in table 1 of the U.S. International Transactions Accounts. Financial flows discussed in this release are not seasonally adjusted. Detailed valuation changes such as price, exchange-rate, and other changes are available only for annual statistics.

3BEA publishes direct investment at market value as an alternative current-period price measure with owners’ equity revalued using indexes of stock market prices. BEA also publishes direct investment at historical cost with owners’ equity at the book value reported on BEA’s surveys. Country and industry detail for direct investment are available only on a historical-cost basis (see http://www.bea.gov/iTable/index_MNC.cfm).

4For additional information on the current-cost and market-value methods, see J. Steven Landefeld and Ann M. Lawson, “Valuation of the U.S. Net International Investment Position,” Survey of Current Business 71 (May 1991): 40–49.