Home > News Release: U.S. International Transactions, Fourth Quarter 2008

News Release: U.S. International Transactions

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FOR WIRE TRANSMISSION: 8:30 A.M. EDT, WEDNESDAY, MARCH 18, 2009
BEA 09-08


Douglas B. Weinberg: (202) 606-9590  

U.S. International Transactions: Fourth Quarter 2008 and Year 2008

                          Fourth Quarter
Current Account

The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--decreased to $132.8 billion (preliminary) in the fourth quarter of 2008, the smallest deficit since the fourth quarter of 2003, from $181.3 billion (revised) in the third quarter of 2008. The decrease mostly resulted from a decrease in the deficit on goods. An increase in the surplus on income and a decrease in net unilateral current transfers to foreigners also contributed to the decrease in the current-account deficit. A decrease in the surplus on services was partly offsetting. Goods and services The deficit on goods and services decreased to $140.4 billion in the fourth quarter from $180.9 billion in the third. Goods The deficit on goods decreased to $174.1 billion in the fourth quarter from $216.3 billion in the third. Goods exports decreased to $290.5 billion from $346.3 billion. All major commodity categories decreased substantially. About half of the total decrease was accounted for by a drop in industrial supplies and materials, mostly resulting from declines in petroleum and products, in chemicals, and in metals and nonmetallic products. The next largest decreases were in capital goods, in foods, feeds, and beverages, in automotive products, and in consumer goods. Goods imports decreased to $464.6 billion from $562.5 billion. Nearly all major commodity categories decreased substantially. About half of the total decrease was accounted for by a decline in petroleum and products. The next largest decreases were in nonpetroleum industrial supplies and materials, in consumer goods, in capital goods, and in automotive products. Services The surplus on services decreased to $33.7 billion in the fourth quarter from $35.4 billion in the third. Services receipts decreased to $132.5 billion from $139.6 billion. The decrease mostly resulted from declines in travel, in “other” transportation (such as freight and port services), in passenger fares, and in “other” private services (such as business, professional, and technical services, insurance services, and financial services). Services payments decreased to $98.8 billion from $104.3 billion. All services categories decreased, but the largest decreases were in “other” transportation and in royalties and license fees. Income The surplus on income increased to $36.5 billion in the fourth quarter from $29.6 billion in the third. Investment income Income receipts on U.S.-owned assets abroad decreased to $165.9 billion from $191.6 billion. The decrease resulted from decreases in direct investment receipts and, to a lesser extent, in “other” private receipts (which consists of interest and dividends). U.S. government receipts (which consists of interest) increased. Income payments on foreign-owned assets in the United States decreased to $127.6 billion from $160.2 billion. The decrease resulted from decreases in direct investment payments and, to a lesser extent, in “other” private payments (which consists of interest and dividends) and in U.S. government payments (which consists of interest). Compensation of employees Receipts for compensation of U.S. workers abroad edged up to $0.8 billion from $0.7 billion, and payments for compensation of foreign workers in the United States edged up to $2.6 billion from $2.5 billion. Unilateral current transfers Net unilateral current transfers to foreigners were $28.9 billion in the fourth quarter, down from $30.0 billion in the third. The decrease was more than accounted for by a decrease in private remittances and other transfers. Capital Account Net capital account payments (outflows) edged down to $0.6 billion in the fourth quarter from $0.7 billion in the third. Financial Account Net financial inflows were $76.8 billion in the fourth quarter, down from $147.3 billion in the third. The slowdown resulted from a shift from financial inflows to financial outflows for foreign-owned assets in the United States (a shift from an increase to a decrease in foreign-owned assets) that was only partly offset by a pickup in financial inflows for U.S.-owned assets abroad (a larger decrease in U.S.-owned assets). U.S.-owned assets abroad U.S.-owned assets abroad decreased $84.4 billion in the fourth quarter, following a decrease of $28.1 billion in the third. U.S. claims on foreigners reported by U.S. banks decreased $298.0 billion in the fourth quarter, following a decrease of $134.4 billion in the third. Net U.S. sales of foreign securities were $77.0 billion in the fourth quarter, down from $82.6 billion in the third. Net U.S. sales of foreign stocks were $39.7 billion, up from $14.8 billion. Net U.S. sales of foreign bonds were $37.3 billion, down from $67.8 billion. U.S. direct investment abroad increased $85.3 billion in the fourth quarter, following an increase of $52.4 billion in the third. The pickup resulted from a larger increase in net equity capital investment abroad and a smaller decrease in net intercompany debt investment abroad in the fourth quarter than in the third. In contrast, reinvested earnings slowed. U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns decreased $63.1 billion in the fourth quarter, following a decrease of $89.5 billion in the third. U.S. official reserve assets increased $3.1 billion in the fourth quarter, following an increase of $0.2 billion in the third. The pickup resulted from an increase in the U.S. reserve position in the International Monetary Fund in the fourth quarter after a decrease in the third. U.S. government assets other than official reserve assets increased $265.2 billion in the fourth quarter, following an increase of $226.0 billion in the third. The very large increases in both quarters resulted from drawings on temporary reciprocal currency arrangements between the U.S. Federal Reserve System and foreign central banks that do not meet the strict definition of U.S. reserve assets. Foreign-owned assets in the United States Foreign-owned assets in the United States decreased $7.6 billion in the fourth quarter, following an increase of $123.3 billion in the third. U.S. liabilities to foreigners reported by U.S. banks decreased $35.1 billion in the fourth quarter, following a decrease of $124.7 billion in the third. Net foreign purchases of U.S. Treasury securities were $89.5 billion in the fourth quarter, up slightly from $89.1 billion in the third. Net foreign sales of U.S. securities other than U.S. Treasury securities were $28.8 billion in the fourth quarter, down from $91.4 billion in the third. Transactions in U.S. stocks shifted to net foreign sales of $3.6 billion from net foreign purchases of $2.9 billion. Net foreign sales U.S. corporate bonds were $3.7 billion, down from $35.5 billion. Net foreign sales of federally sponsored agency bonds were $21.4 billion, down from $58.8 billion. Foreign direct investment in the United States increased $80.6 billion in the fourth quarter, following an increase of $57.3 billion in the third. The pickup resulted from a substantial pickup in net equity capital investment in the United States and, to a lesser extent, a smaller decrease in net intercompany debt investment in the United States in the fourth quarter than in the third quarter. In contrast, reinvested earnings were negative in the fourth quarter after having been positive in the third quarter. U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns decreased $130.1 billion in the fourth quarter, following an increase of $71.1 billion in the third. Foreign official assets in the United States decreased $13.6 billion in the fourth quarter, following an increase of $116.1 billion in the third. The shift mostly resulted from a decrease in U.S. liabilities reported by U.S. banks in the fourth quarter after an increase in the third. Net U.S. currency shipments to foreigners were $29.9 billion in the fourth quarter, up from $5.8 billion in the third. The statistical discrepancy--errors and omissions in recorded transactions--was a positive $56.6 billion in the fourth quarter, compared with a positive $34.7 billion in the third. In the fourth quarter, the U.S. dollar appreciated 11 percent on a trade- weighted quarterly average basis against a group of 7 major currencies. The Year 2008 Current Account The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--decreased to $673.3 billion (preliminary) in 2008 from $731.2 billion in 2007. The decrease resulted from increases in the surpluses on income and on services. These increases were partly offset by increases in net unilateral current transfers to foreigners and in the deficit on goods. Goods and services The deficit on goods and services decreased to $681.1 billion in 2008 from $700.3 billion in 2007. Goods The deficit on goods increased to $820.8 billion in 2008 from $819.4 billion in 2007. Goods exports increased to $1,291.4 billion from $1,148.5 billion. About half of the increase was accounted for by an increase in industrial supplies and materials, mostly resulting from rises in petroleum and products, in metals and nonmetallic products, and in chemicals. The next largest increases were in foods, feeds, and beverages, in capital goods, and in consumer goods. Goods imports increased to $2,112.2 billion from $1,967.9 billion. More than four-fifths of the increase was accounted for by an increase in petroleum and products. The next largest increases were in nonpetroleum industrial supplies and materials, in capital goods, in foods, feeds, and beverages, and in consumer goods. These increases were partly offset by a decrease in automotive products. Services The surplus on services increased to $139.7 billion in 2008 from $119.1 billion in 2007. Services receipts increased to $544.4 billion from $497.2 billion. The increase resulted from increases in nearly all services categories. The largest increases were in “other” private services (such as business, professional, and technical services, insurance services, and financial services), in travel, in “other” transportation (such as freight and port services), in passenger fares, and in royalties and license fees. Services payments increased to $404.7 billion from $378.1 billion. All services categories increased, but the largest increases were in “other” private services, in “other” transportation, in passenger fares, in travel, and in direct defense expenditures. Income The surplus on income increased to $127.6 billion in 2008 from $81.7 billion in 2007. Investment income Income receipts on U.S.-owned assets abroad decreased to $752.4 billion from $814.8 billion. The decrease was more than accounted for by a decrease in “other” private receipts (which consists of interest and dividends). Direct investment receipts and U.S. government receipts (which consists of interest) both increased. Income payments on foreign-owned assets in the United States decreased to $617.6 billion from $726.0 billion. The decrease resulted from decreases in “other” private payments (which consists of interest and dividends) and in direct investment payments. U.S. government payments (which consists of interest) increased. Compensation of employees Receipts for compensation of U.S. workers abroad were virtually unchanged at $3.0 billion, and payments for compensation of foreign workers in the United States increased slightly to $10.3 billion from $10.0 billion. Unilateral current transfers Net unilateral current transfers to foreigners were $119.7 billion in 2008, up from $112.7 billion in 2007. The increase was mostly accounted for by an increase in private remittances and other transfers. Capital Account Net capital account payments (outflows) were $2.6 billion in 2008, up from $1.8 billion in 2007. Financial Account Net financial inflows--net acquisitions by foreign residents of assets in the United States less net acquisitions by U.S. residents of assets abroad-- were $546.6 billion in 2008, down from $774.3 billion in 2007. 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 $52.5 billion in 2008, following an increase of $1,289.9 billion in 2007. U.S. claims on foreigners reported by U.S. banks decreased $425.0 billion in 2008, following an increase of $644.8 billion in 2007. Transactions in foreign securities shifted to net U.S. sales of $91.0 billion in 2008 from net U.S. purchases of $288.7 billion in 2007. Transactions in foreign stocks shifted to net U.S. sales of $6.3 billion from net U.S. purchases of $118.0 billion. Transactions in foreign bonds shifted to net U.S. sales of $84.7 billion from net U.S. purchases of $170.7 billion. U.S. direct investment abroad increased $317.8 billion in 2008, following an increase of $333.3 billion in 2007. The slowdown resulted from slowdowns in reinvested earnings and in net equity capital investment abroad. In contrast, net intercompany debt investment abroad decreased less in 2008 than in 2007. U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns decreased $283.8 billion in 2008, following an increase of $0.7 billion in 2007. U.S. official reserve assets increased $4.8 billion in 2008, following an increase of $0.1 billion in 2007. U.S. government assets other than official reserve assets increased $529.5 billion in 2008, following an increase of $22.3 billion in 2007. The large increase in 2008 resulted from drawings on temporary reciprocal currency arrangements between the U.S. Federal Reserve System and foreign central banks that do not meet the strict definition of U.S. reserve assets. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $599.0 billion in 2008, following an increase of $2,057.7 billion in 2007. U.S. liabilities to foreigners reported by U.S. banks decreased $337.3 billion in 2008, following an increase of $532.8 billion in 2007. Net foreign purchases of U.S. Treasury securities were $307.6 billion in 2008, up from $156.8 billion in 2007. Transactions in U.S. securities other than U.S. Treasury securities shifted to net foreign sales of $123.6 billion in 2008 from net foreign purchases of $573.9 billion in 2007. Net foreign purchases of U.S. stocks were $6.9 billion, down from $182.4 billion. Net foreign purchases of U.S. corporate bonds were $0.6 billion, down from $372.1 billion. Transactions in federally sponsored agency bonds shifted to net foreign sales of $131.0 billion from net foreign purchases of $19.4 billion. Foreign direct investment in the United States increased $325.3 billion in 2008, following an increase of $237.5 billion in 2007. The pickup resulted from pickups in net equity capital investment in the United States and, to a lesser extent, in net intercompany debt investment in the United States. In contrast, reinvested earnings slowed. U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns decreased $29.3 billion in 2008, following an increase of $156.3 billion in 2007. Foreign official assets in the United States increased $421.4 billion in 2008, following an increase of $411.1 billion in 2007. Transactions in U.S. currency shifted to net shipments from the United States to foreign countries of $35.0 billion in 2008, following net shipments from foreign countries to the United States of $10.7 billion in 2007. The statistical discrepancy--errors and omissions in recorded transactions--was a positive $129.3 billion in 2008, compared with a negative $41.3 billion in 2007. In 2008, the U.S. dollar depreciated 4 percent on a trade-weighted yearly average basis against a group of 7 major currencies. Revisions The first three quarters of 2008 were revised to reflect revised seasonal adjustments and, for the third quarter, receipt of new or revised data. Revisions to the first and second quarters were small. In the third quarter, the current-account deficit was revised to $181.3 billion from $174.1 billion. The goods deficit was revised to $216.3 billion from $214.7 billion; the services surplus was revised to $35.4 billion from $38.2 billion; the surplus on income was revised to $29.6 billion from $30.8 billion; and net unilateral current transfers to foreigners were revised to $30.0 billion from $28.4 billion. Net financial inflows were revised to $147.3 billion from $135.2 billion. * * * Release dates in 2009: Fourth quarter and year 2008...................March 18, 2009 (Wednesday) First quarter 2009..............................June 17, 2009 (Wednesday) Second quarter 2009........................September 16, 2009 (Wednesday) Third quarter 2009..........................December 16, 2009 (Wednesday)