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News Release: U.S. International Transactions

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FOR WIRE TRANSMISSION: 8:30 A.M. EDT, MONDAY, September 18, 2006

Douglas B. Weinberg:        (202) 606-9590                            BEA 06-40


             U.S. International Transactions: Second Quarter 2006

                                Current Account

        The U.S. current-account deficit--the combined balances on trade in
goods and services, income, and net unilateral current transfers--increased to
$218.4 billion (preliminary) in the second quarter of 2006 from $213.2 billion
(revised) in the first quarter.  The increase was mostly accounted for by
increases in the deficits on goods and on income.  Net unilateral current
transfers to foreigners also increased, and the surplus on services was
virtually unchanged.

Goods and services

        The deficit on goods and services increased to $193.8 billion in the
second quarter from $191.1 billion in the first.

        Goods

        The deficit on goods increased to $210.6 billion in the second quarter
from $208.0 billion in the first.

        Goods exports increased to $252.8 billion from $244.5 billion.  The
increase was largely accounted for by increases in industrial supplies and
materials and in capital goods.

        Goods imports increased to $463.4 billion from $452.5 billion.  The
increase was largely accounted for by an increase in petroleum and products.
The largest increases in nonpetroleum products were in capital goods and in
consumer goods.

        Services

        The surplus on services was virtually unchanged at $16.8 billion in the
second quarter.

        Services receipts increased to $103.0 billion from $99.9 billion.  The
largest increases were in “other” private services (such as business,
professional, and technical services, insurance services, and financial
services), in travel, in royalties and license fees, and in “other”
transportation (such as freight and port services).

        Services payments increased to $86.3 billion from $83.1 billion.  The
largest increases were in “other” private services, in travel, and in passenger
fares.

Income

        The deficit on income increased to $4.1 billion in the second quarter
from $2.5 billion in the first.

        Investment income

        Income receipts on U.S.-owned assets abroad increased to $153.5 billion
from $139.2 billion.  “Other” private receipts (which consists of interest and
dividends) increased strongly, and direct investment receipts also increased.

        Income payments on foreign-owned assets in the United States increased
to $156.0 billion from $140.1 billion.  “Other” private payments (which
consists of interest and dividends) increased strongly, and U.S. Government
payments (which consists of interest) and direct investment payments also
increased.

        Compensation of employees

        Receipts for compensation of U.S. workers abroad were virtually
unchanged at $0.7 billion, and payments for compensation of foreign workers in
the United States were virtually unchanged at $2.3 billion.

Unilateral current transfers

        Net unilateral current transfers to foreigners were $20.4 billion in
the second quarter, up from $19.5 billion in the first.  The increase was
accounted for by increases in private remittances and other transfers and in
U.S. Government grants.

                         Capital and Financial Account

                                Capital Account

        Capital account transactions were net outflows (payments) of $0.9
billion in the second quarter, down from net outflows of $1.8 billion in the
first.

                               Financial Account

        Net recorded financial inflows--net acquisitions by foreign residents
of assets in the United States less net acquisitions by U.S. residents of
assets abroad--were $154.1 billion in the second quarter, down from $171.5
billion in the first.  Net acquisitions by foreign residents slowed more than
net acquisitions by U.S. residents.

U.S.-owned assets abroad

        U.S.-owned assets abroad increased $212.3 billion in the second quarter,
following an increase of $356.0 billion in the first.

        U.S. claims on foreigners reported by U.S. banks increased $81.5
billion in the second quarter, following an increase of $196.4 billion in the
first.

        Net U.S. purchases of foreign securities were $52.2 billion in the second
quarter, down from $53.7 billion in the first.  Net U.S. purchases of foreign
stocks were $17.4 billion, down from $41.1 billion.  Net U.S. purchases of
foreign bonds were $34.8 billion, up from $12.6 billion.

        U.S. direct investment abroad increased $47.1 billion in the second
quarter, following an increase of $61.3 billion in the first.  A shift to a
decrease in net intercompany debt investment abroad from an increase and a
slowdown in net equity capital investment abroad were partly offset by a pickup
in reinvested earnings.

        U.S. official reserve assets increased $0.6 billion in the second
quarter, following a decrease of $0.5 billion in the first.

Foreign-owned assets in the United States

        Foreign-owned assets in the United States increased $366.4 billion in
the second quarter, following an increase of $527.5 billion in the first.

        U.S. liabilities to foreigners reported by U.S. banks increased $84.2
billion in the second quarter, following an increase of $148.9 billion in the
first.

        Transactions in U.S. Treasury securities shifted to net foreign
purchases of $10.1 billion in the second quarter from net foreign sales of $5.2
billion in the first.

        Net foreign purchases of U.S. securities other than U.S. Treasury
securities were $121.6 billion in the second quarter, down from $186.0 billion
in the first.  Transactions in U.S. stocks shifted to net foreign sales of $1.6
billion from net foreign purchases of $54.0 billion.  Net foreign purchases of
U.S. corporate bonds were a record $95.2 billion, up from $90.1 billion.  Net
foreign purchases of federally sponsored agency bonds were $28.0 billion, down
from $41.9 billion.

        Foreign direct investment in the United States increased $48.4 billion
in the second quarter, following an increase of $45.3 billion in the first.  A
shift to an increase in net intercompany debt investment in the United States
from a decrease and a pickup in reinvested earnings were partly offset by a
slowdown in net equity capital investment in the United States.

        Foreign official assets in the United States increased $74.9 billion in
the second quarter, following an increase of $75.7 billion in the first.

        Net U.S. currency shipments to foreigners were $1.1 billion in the
second quarter, down from $1.9 billion in the first.

        The statistical discrepancy--errors and omissions in recorded
transactions--was a positive $65.2 billion in the second quarter, compared with
a positive $43.4 billion in the first.

        In the second quarter, the U.S. dollar depreciated 3 percent on a trade-
weighted quarterly average basis against a group of 7 major currencies.

                                   Revisions

        The first-quarter international transactions are revised from previously
published estimates.  The current-account deficit was revised to $213.2 billion
from $208.7 billion.  The goods deficit was unrevised at $208.0 billion; the
services surplus was revised to $16.8 billion from $17.2 billion; the balance
on income was revised to a deficit of $2.5 billion from a surplus of $1.9
billion; and unilateral current transfers were revised to net outflows of $19.5
billion from $19.9 billion.  Net recorded financial inflows were revised to
$171.5 billion from $157.6 billion.

                            *          *          *

      	Release dates in 2006:

      	Fourth quarter and year 2005..................March 14, 2006 (Tuesday)
      	First quarter 2006..............................June 16, 2006 (Friday)
      	Second quarter 2006........................September 18, 2006 (Monday)
     	Third quarter 2006..........................December 18, 2006 (Monday)

                            *          *          *

        Summary BEA estimates are available on recorded messages at the time of
public release at the following telephone numbers:

                   (202) 606-5306 Gross domestic product
                            -5303 Personal income and outlays

        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 of BEA releases and announcements.

                                                                                                                                                    September 18, 2006
    Table 1. U.S. International Transactions
    [Millions of dollars, quarters seasonally adjusted]

                                                                                                            2005                                2006              Change:
                                           (Credits +, debits -)                                 2005                                                               2006
                                                                                                            I        II       III      IV       I r      II p       I-II

                                              Current account

            1 Exports of goods and services and income receipts................................  1,749,892  415,277  429,326  442,935  462,357  484,396  510,062   25,666

            2    Exports of goods and services.................................................  1,275,245  306,580  316,645  320,853  331,165  344,430  355,879   11,449

            3        Goods, balance of payments basis..........................................    894,631  214,189  222,591  224,947  232,904  244,512  252,843    8,331

            4        Services..................................................................    380,614   92,391   94,054   95,906   98,261   99,918  103,036    3,118
            5            Transfers under U.S. military agency sales contracts..................     19,038    4,679    4,675    5,239    4,446    4,453    4,269     -184

            6            Travel................................................................     81,680   19,983   20,934   20,389   20,374   20,742   21,697      955
            7            Passenger fares.......................................................     20,931    4,890    5,161    5,508    5,371    5,545    5,376     -169
            8            Other transportation..................................................     42,245   10,103   10,353   10,545   11,244   11,588   12,122      534

            9            Royalties and license fees............................................     57,410   14,146   13,943   14,397   14,923   15,040   15,601      561
           10            Other private services................................................    158,223   38,316   38,726   39,538   41,643   42,273   43,690    1,417
           11            U.S. Government miscellaneous services................................      1,087      274      262      291      260      277      281        4

           12    Income receipts...............................................................    474,647  108,697  112,681  122,081  131,192  139,966  154,183   14,217
           13        Income receipts on U.S.-owned assets abroad...............................    471,722  107,988  111,952  121,350  130,437  139,238  153,457   14,219
           14            Direct investment receipts............................................    251,370   58,846   60,572   64,476   67,481   68,738   72,911    4,173
           15            Other private receipts................................................    217,637   48,437   50,674   56,247   62,279   69,923   79,831    9,908
           16            U.S. Government receipts..............................................      2,715      705      706      627      677      577      715      138
           17        Compensation of employees.................................................      2,925      709      729      731      755      728      726       -2

           18 Imports of goods and services and income payments................................ -2,455,328 -579,764 -599,390 -616,886 -659,290 -678,052 -708,028  -29,976

           19    Imports of goods and services................................................. -1,991,975 -474,688 -488,703 -502,645 -525,939 -535,570 -549,696  -14,126

           20        Goods, balance of payments basis.......................................... -1,677,371 -397,457 -410,811 -423,693 -445,410 -452,481 -463,441  -10,960

           21        Services..................................................................   -314,604  -77,231  -77,892  -78,952  -80,529  -83,089  -86,255   -3,166
           22            Direct defense expenditures...........................................    -30,062   -7,542   -7,478   -7,539   -7,503   -7,692   -7,858     -166

           23            Travel................................................................    -69,175  -17,270  -17,589  -17,181  -17,135  -17,634  -18,658   -1,024
           24            Passenger fares.......................................................    -26,066   -6,213   -6,555   -6,654   -6,644   -6,749   -7,266     -517
           25            Other transportation..................................................    -62,107  -15,617  -15,135  -15,205  -16,150  -16,232  -16,390     -158

           26            Royalties and license fees............................................    -24,501   -5,880   -6,004   -6,356   -6,261   -6,741   -6,760      -19
           27            Other private services................................................    -98,714  -23,699  -24,169  -25,001  -25,845  -27,045  -28,309   -1,264
           28            U.S. Government miscellaneous services................................     -3,979   -1,010     -962   -1,016     -991     -996   -1,014      -18

           29    Income payments...............................................................   -463,353 -105,076 -110,687 -114,240 -133,351 -142,482 -158,332  -15,850
           30        Income payments on foreign-owned assets in the United States..............   -454,124 -102,817 -108,403 -111,887 -131,018 -140,132 -155,983  -15,851
           31            Direct investment payments............................................   -116,953  -28,490  -29,520  -24,105  -34,839  -34,443  -36,889   -2,446
           32            Other private payments................................................   -223,612  -48,786  -51,490  -58,479  -64,857  -72,813  -82,827  -10,014
           33            U.S. Government payments..............................................   -113,559  -25,541  -27,393  -29,303  -31,322  -32,876  -36,267   -3,391
           34        Compensation of employees.................................................     -9,229   -2,259   -2,284   -2,353   -2,333   -2,350   -2,349        1

           35 Unilateral current transfers, net................................................    -86,072  -27,237  -23,194   -9,464  -26,176  -19,542  -20,444     -902
           36    U.S. Government grants........................................................    -31,362   -9,221   -5,780   -7,270   -9,091   -4,631   -4,940     -309
           37    U.S. Government pensions and other transfers..................................     -6,303   -1,558   -1,569   -1,584   -1,592   -1,742   -1,753      -11
           38    Private remittances and other transfers.......................................    -48,407  -16,458  -15,845     -610  -15,493  -13,169  -13,751     -582


                                                                                                                                                       September 18, 2006
    Table 1. U.S. International Transactions (Continued)
    [Millions of dollars, quarters seasonally adjusted]

                                                                                                            2005                                2006              Change:
                                           (Credits +, debits -)                                 2005                                                               2006
                                                                                                            I        II       III      IV       I r      II p       I-II

                                       Capital and financial account

                                              Capital account

           39 Capital account transactions, net................................................     -4,351   -2,691     -589     -557     -514   -1,756     -882      874

                                             Financial account

           40 U.S.-owned assets abroad, net (increase/financial outflow (-))...................   -426,801  -87,391 -196,376 -132,380  -10,656 -355,978 -212,339  143,639

           41    U.S. official reserve assets, net.............................................     14,096    5,331     -797    4,766    4,796      513     -560   -1,073
           42        Gold......................................................................       ....     ....     ....     ....     ....     ....     ....     ....
           43        Special drawing rights....................................................      4,511    1,713      -97    2,976      -81      -67      -51       16
           44        Reserve position in the International Monetary Fund.......................     10,200    3,763     -564    1,951    5,050      729     -351   -1,080
           45        Foreign currencies........................................................       -615     -145     -136     -161     -173     -149     -158       -9

           46    U.S. Government assets, other than official reserve assets, net...............      5,539    2,591      989    1,501      459    1,049    1,479      430
           47        U.S. credits and other long-term assets...................................     -2,255     -519     -708     -518     -509   -1,517     -373    1,144
           48        Repayments on U.S. credits and other long-term assets.....................      5,603    1,083    1,586    1,957      977    2,558    1,861     -697
           49        U.S. foreign currency holdings and U.S. short-term assets, net............      2,191    2,027      111       62       -9        8       -9      -17

           50    U.S. private assets, net......................................................   -446,436  -95,313 -196,568 -138,647  -15,911 -357,540 -213,258  144,282
           51        Direct investment.........................................................     -9,072  -31,259  -33,957   30,342   25,799  -61,251  -47,102   14,149
           52        Foreign securities........................................................   -180,125  -50,367  -45,702  -36,790  -47,266  -53,692  -52,215    1,477
           53        U.S. claims on unaffiliated foreigners reported by
                         U.S. nonbanking concerns..............................................    -44,221  -67,170   57,244  -29,483   -4,812  -46,190  -32,408   13,782
           54        U.S. claims reported by U.S. banks, not included elsewhere................   -213,018   53,483 -174,153 -102,716   10,368 -196,407  -81,533  114,874

           55 Foreign-owned assets in the United States, net (increase/financial inflow (+))...  1,212,250  224,128  346,179  388,592  253,350  527,498  366,397 -161,101

           56    Foreign official assets in the United States, net.............................    199,495   18,965   74,613   33,983   71,934   75,697   74,874     -823
           57        U.S. Government securities................................................    156,450   33,007   36,313   25,926   61,204   66,219   21,553  -44,666
           58            U.S. Treasury securities..............................................     71,749    9,226   16,892    8,213   37,418   42,156   -8,905  -51,061
           59            Other.................................................................     84,701   23,781   19,421   17,713   23,786   24,063   30,458    6,395
           60        Other U.S. Government liabilities.........................................       -488     -740      112      395     -255       37      637      600
           61        U.S. liabilities reported by U.S. banks, not included elsewhere...........     24,275  -15,814   34,187      824    5,078     -821   41,730   42,551
           62        Other foreign official assets.............................................     19,258    2,512    4,001    6,838    5,907   10,262   10,954      692
           
	   63    Other foreign assets in the United States, net................................  1,012,755  205,163  271,566  354,609  181,416  451,801  291,523 -160,278
           64        Direct investment.........................................................    109,754   30,539    8,245   44,459   26,510   45,268   48,413    3,145
           65        U.S. Treasury securities..................................................    199,491   86,108   14,103   37,239   62,041   -5,212   10,065   15,277
           66        U.S. securities other than U.S. Treasury securities.......................    474,140   77,412  111,808  153,049  131,871  186,009  121,556  -64,453
           67        U.S. currency.............................................................     19,416    1,072    4,507    4,679    9,158    1,932    1,127     -805
           68        U.S. liabilities to unaffiliated foreigners reported by
                         U.S. nonbanking concerns..............................................     30,105   80,174  -20,035   20,271  -50,305   74,953   26,115  -48,838
           69        U.S. liabilities reported by U.S. banks, not included elsewhere...........    179,849  -70,142  152,938   94,912    2,141  148,851   84,247  -64,604

           70 Statistical discrepancy (sum of above items with sign reversed)..................     10,410   57,678   44,044  -72,240  -19,071   43,434   65,234   21,800

              Memoranda:
           71 Balance on goods (lines 3 and 20)................................................   -782,740 -183,268 -188,220 -198,746 -212,506 -207,969 -210,598   -2,629
           72 Balance on services (lines 4 and 21).............................................     66,011   15,160   16,162   16,954   17,733   16,829   16,781      -48
           73 Balance on goods and services (lines 2 and 19)...................................   -716,730 -168,108 -172,058 -181,792 -194,774 -191,140 -193,817   -2,677
           74 Balance on income (lines 12 and 29)..............................................     11,293    3,621    1,994    7,841   -2,159   -2,516   -4,149   -1,633
           75 Unilateral current transfers, net (line 35)......................................    -86,072  -27,237  -23,194   -9,464  -26,176  -19,542  -20,444     -902
           76 Balance on current account (lines 1, 18, and 35 or lines 73, 74, and 75).........   -791,508 -191,724 -193,258 -183,415 -223,109 -213,198 -218,410   -5,212
    r Revised
    p Preliminary
    NOTE:  Details may not add to totals because of rounding.     Source:  U. S. Bureau of Economic Analysis