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Douglas B. Weinberg: (202) 606-9590 BEA 05-54
U.S. International Transactions: Third Quarter 2005
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 $195.8
billion (preliminary) in the third quarter of 2005 from $197.8 billion (revised)
in the second quarter. The decrease was more than accounted for by a decrease
in net outflows for unilateral current transfers, a shift to a surplus on income
from a deficit, and an increase in the surplus on services. In contrast, the
deficit on goods increased.
Goods and services
The deficit on goods and services increased to $182.8 billion in the
third quarter from $173.6 billion in the second.
Goods
The deficit on goods increased to $197.9 billion in the third quarter
from $186.9 billion in the second.
Goods exports increased to $225.2 billion from $223.5 billion. Automotive
vehicles, engines, and parts, capital goods, and consumer goods more than
accounted for the increase. Foods, feeds, and beverages decreased.
Goods imports increased to $423.2 billion from $410.5 billion. Petroleum
and petroleum products accounted for eighty percent of the increase, and
automotive vehicles, engines, and parts accounted for nearly all of the remainder.
Services
The surplus on services increased to $15.1 billion in the third quarter
from $13.3 billion in the second.
Services receipts increased to $95.5 billion from $93.7 billion. The
increase was mostly attributable to increases in other private services (such
as business, professional, and technical services, insurance services, and
financial services), in transfers under U.S. military agency sales contracts,
and in other transportation (such as freight and port services). In contrast,
both travel and passenger fares decreased.
Services payments were virtually unchanged at $80.4 billion. Decreases
in travel and in passenger fares were offset by increases in other services
categories, particularly in other private services.
Income
The balance on income shifted to a surplus of $0.5 billion in the third
quarter from a deficit of $1.5 billion in the second.
Investment income
Income receipts on U.S.-owned assets abroad increased to $118.0 billion
from $110.4 billion. The increase was accounted for by increases in other
private receipts (which consists of interest and dividends) and in direct
investment receipts.
Income payments on foreign-owned assets in the United States increased
to $115.9 billion from $110.5 billion. Increases in other private payments
(which consists of interest and dividends) and in U.S. Government payments
(which consists of interest) were partly offset by a decrease in direct
investment payments.
Compensation of employees
Receipts for compensation of U.S. workers abroad were virtually unchanged
at $0.8 billion, and payments for compensation of foreign workers in the United
States edged up to $2.3 billion from $2.2 billion.
Unilateral current transfers
Unilateral current transfers were net outflows of $13.5 billion in the
third quarter, down from net outflows of $22.6 billion in the second; the
decrease was more than accounted for by a decrease in private remittances and
other transfers. The decrease in this category mostly resulted from unusually
large claims received by U.S. companies from foreign insurance companies as a
result of the extensive damage caused by hurricanes Katrina and Rita.
Capital and Financial Account
Capital Account
Capital account transactions were net outflows of $0.3 billion in the
third quarter, unchanged from the second quarter.
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 $272.9 billion in the third quarter, up from $150.6 billion in the
second. Financial outflows for U.S.-owned assets abroad slowed, and financial
inflows for foreign-owned assets in the United States picked up.
U.S.-owned assets abroad
U.S.-owned assets abroad increased $124.0 billion in the third quarter,
following an increase of $225.2 billion in the second.
U.S. claims on foreigners reported by U.S. banks increased $107.9 billion
in the third quarter, following an increase of $171.0 billion in the second.
Net U.S. purchases of foreign securities were $34.0 billion in the third
quarter, down from $42.0 billion in the second. Net U.S. purchases of foreign
stocks were $34.6 billion, up from $23.9 billion. Transactions in foreign bonds
shifted to net U.S. sales of $0.7 billion from net U.S. purchases of $18.1 billion.
Net financial flows for U.S. direct investment abroad shifted to net
inflows of $27.1 billion in the third quarter from net outflows of $21.4 billion
in the second. Reinvested earnings shifted to an inflow of $27.2 billion from
an outflow of $16.0 billion, largely reflecting the drawdown of cumulative
reinvested earnings in affiliates abroad to support the increased distribution
of earnings to parents in the United States. Most of this drawdown was in
response to the tax incentives provided by the American Jobs Creation Act of
2004. In addition, net equity capital outflows decreased, and net intercompany
debt inflows increased.
U.S. official reserve assets decreased $4.8 billion in the third quarter,
in contrast to an increase of $0.8 billion in the second.
Foreign-owned assets in the United States
Foreign-owned assets in the United States increased $396.9 billion in the
third quarter, following an increase of $375.8 billion in the second.
U.S. liabilities to foreigners reported by U.S. banks increased $88.7
billion in the third quarter, following an increase of $149.1 billion in the second.
Net foreign purchases of U.S. Treasury securities were $40.9 billion in
the third quarter, up from $9.9 billion in the second.
Net foreign purchases of U.S. securities other than U.S. Treasury
securities were a record $160.7 billion in the third quarter, up from $114.1
billion in the second. Net foreign purchases of U.S. stocks were $26.6 billion,
up from $13.7 billion. Net foreign purchases of U.S. corporate bonds were $99.5
billion, up from $80.0 billion. Net foreign purchases of federally sponsored
agency bonds were $34.5 billion, up from $20.4 billion.
Net financial inflows for foreign direct investment in the United States
were $38.8 billion in the third quarter, up from $14.5 billion in the second.
A shift to net inflows on intercompany debt from net outflows and an increase
in net equity capital inflows were partly offset by a decrease in reinvested
earnings.
Foreign official assets in the United States increased $38.4 billion in
the third quarter, following an increase of $82.6 billion in the second.
Net U.S. currency shipments to foreigners were $4.7 billion in the
third quarter, up from $4.5 billion in the second.
The statistical discrepancy--errors and omissions in recorded
transactions--was a negative $76.8 billion in the third quarter, compared with
a positive $47.5 billion in the second.
In the third quarter, the U.S. dollar appreciated 1 percent on a
trade-weighted quarterly average basis against a group of 7 major currencies.
Special Developments in the Accounts
Insurance
The extensive damage caused by the hurricanes Katrina and Rita in the
third quarter of 2005 gives rise to large net unilateral current transfers.
Claims received by U.S. companies from foreign insurance companies that are in
excess of "expected" claims are reflected in the private remittances and other
transfers component of the net unilateral current transfers account. "Expected"
claims are estimated as premiums multiplied by the historical average of claims
as a percentage of premiums. In addition, donations from abroad for hurricane
relief are reflected in this account. These two increases in U.S. receipts
cause net unilateral current transfers to become less negative and, taken by
themselves, reduce the current-account deficit in the third quarter.
Insurance services payments and receipts, which are components of other
private services payments and receipts in the current account, are unaffected by
the occurrence of hurricanes Katrina and Rita. This is because insurance
services performed are based on premiums, and these were set before the events
occurred.
U.S. direct investment abroad income and financial flows
The American Jobs Creation Act of 2004, which was signed into law on
October 22, 2004, reduces the rate of taxation on U.S. multinational companies'
qualifying dividends from abroad for a period of 1 year (calendar year 2004 or
2005 at taxpayers' option, for calendar year taxpayers).
In the current account, the size of income receipts (earnings) on U.S.
direct investment abroad is unaffected by the Act, although the composition of
earnings has been altered significantly as the amount of earnings reinvested in
affiliates abroad has been drawn down to support the increased distribution of
earnings to parents in the United States.
In the financial account, the reinvested earnings component of U.S.
direct investment abroad has been significantly reduced as a result of the Act,
resulting in smaller direct investment outflows or in inflows. The reduction
in reinvested earnings in the first and second quarters led to smaller direct
investment outflows, and the large reduction in reinvested earnings in the third
quarter led to a shift to direct investment inflows. Depending on the method of
settlement, changes in direct investment flows are balanced or offset by changes
in one or more other financial account components.
Detailed estimates of direct investment transactions (including
distributed and reinvested earnings) are shown in table 6a of the standard
presentation of the quarterly international transactions accounts, available on
BEA's Web site. It is not possible for BEA to separately identify transactions
arising from the Act.
Revisions
The second-quarter international transactions are revised from previously
published estimates. The current-account deficit was revised to $197.8 billion
from $195.7 billion. The goods deficit was unrevised at $186.9 billion; the
services surplus was revised to $13.3 billion from $13.6 billion; the income
deficit was revised to $1.5 billion from $0.5 billion; and unilateral current
transfers were revised to net outflows of $22.6 billion from $21.9 billion.
Net recorded financial inflows were revised to $150.6 billion from $142.3 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
BEAs national, international, regional, and industry estimates; the
Survey of Current Business; and BEA news releases are available without charge
on BEAs 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.
December 16, 2005
Table 1. U.S. International Transactions
[Millions of dollars, quarters seasonally adjusted]
2004 2005 Change:
(Credits +, debits -) 2004 2005
I II III IV I II r III p II-III
Current account
1 Exports of goods and services and income receipts............................. 1,530,975 363,494 376,564 385,874 405,041 413,395 428,414 439,496 11,082
2 Exports of goods and services.............................................. 1,151,448 277,093 285,099 290,370 298,887 306,444 317,267 320,764 3,497
3 Goods, balance of payments basis....................................... 807,536 193,789 200,072 204,801 208,874 213,840 223,540 225,226 1,686
4 Services............................................................... 343,912 83,304 85,027 85,569 90,013 92,604 93,727 95,538 1,811
5 Transfers under U.S. military agency sales contracts............... 14,814 3,899 3,756 3,604 3,555 4,525 4,425 4,843 418
6 Travel............................................................. 74,481 17,900 18,675 18,686 19,220 20,008 21,380 21,156 -224
7 Passenger fares.................................................... 18,858 4,521 4,654 4,909 4,774 5,162 5,492 5,408 -84
8 Other transportation............................................... 36,862 8,907 9,188 9,124 9,643 9,859 10,115 10,518 403
9 Royalties and license fees......................................... 52,643 12,677 12,573 12,947 14,446 14,872 14,078 14,294 216
10 Other private services............................................. 145,433 35,202 35,975 36,094 38,163 37,968 38,031 39,109 1,078
11 U.S. Government miscellaneous services............................. 821 198 206 205 212 210 206 210 4
12 Income receipts............................................................ 379,527 86,401 91,465 95,504 106,154 106,951 111,147 118,732 7,585
13 Income receipts on U.S.-owned assets abroad............................ 376,489 85,657 90,738 94,734 105,357 106,207 110,391 117,968 7,577
14 Direct investment receipts......................................... 233,067 55,096 57,053 57,863 63,053 58,180 59,635 61,787 2,152
15 Other private receipts............................................. 140,424 29,758 32,972 36,117 41,577 47,299 49,993 55,576 5,583
16 U.S. Government receipts........................................... 2,998 803 713 754 727 728 763 605 -158
17 Compensation of employees.............................................. 3,038 744 727 770 797 744 756 764 8
18 Imports of goods and services and income payments............................. -2,118,119 -487,324 -522,684 -537,085 -571,026 -585,804 -603,554 -621,779 -18,225
19 Imports of goods and services.............................................. -1,769,031 -415,945 -437,141 -447,835 -468,108 -479,496 -490,866 -503,559 -12,693
20 Goods, balance of payments basis....................................... -1,472,926 -345,241 -364,059 -372,576 -391,050 -400,169 -410,469 -423,151 -12,682
21 Services............................................................... -296,105 -70,704 -73,082 -75,259 -77,058 -79,327 -80,397 -80,408 -11
22 Direct defense expenditures........................................ -29,299 -7,099 -7,399 -7,433 -7,368 -7,545 -7,491 -7,495 -4
23 Travel............................................................. -65,635 -15,886 -16,491 -16,603 -16,655 -17,425 -18,106 -17,337 769
24 Passenger fares.................................................... -23,701 -5,740 -5,882 -5,896 -6,183 -6,221 -6,536 -6,204 332
25 Other transportation............................................... -54,169 -12,914 -13,158 -13,614 -14,483 -15,882 -15,115 -15,217 -102
26 Royalties and license fees......................................... -23,901 -5,407 -5,731 -6,591 -6,172 -6,429 -6,147 -6,273 -126
27 Other private services............................................. -95,666 -22,776 -23,492 -24,150 -25,246 -24,859 -26,051 -26,910 -859
28 U.S. Government miscellaneous services............................. -3,734 -882 -929 -972 -951 -966 -951 -972 -21
29 Income payments............................................................ -349,088 -71,379 -85,543 -89,250 -102,918 -106,308 -112,688 -118,220 -5,532
30 Income payments on foreign-owned assets in the United States........... -340,255 -69,219 -83,331 -87,040 -100,666 -104,140 -110,493 -115,931 -5,438
31 Direct investment payments......................................... -105,146 -20,014 -27,973 -27,520 -29,640 -29,803 -31,145 -27,078 4,067
32 Other private payments............................................. -145,370 -29,040 -33,355 -36,246 -46,729 -48,333 -51,377 -58,752 -7,375
33 U.S. Government payments........................................... -89,739 -20,165 -22,003 -23,274 -24,297 -26,004 -27,971 -30,101 -2,130
34 Compensation of employees.............................................. -8,833 -2,160 -2,212 -2,210 -2,252 -2,168 -2,195 -2,289 -94
35 Unilateral current transfers, net............................................. -80,930 -22,271 -20,515 -15,771 -22,374 -26,259 -22,641 -13,538 9,103
36 U.S. Government grants..................................................... -23,317 -7,744 -4,961 -4,911 -5,701 -9,035 -5,724 -6,314 -590
37 U.S. Government pensions and other transfers............................... -6,264 -1,554 -1,556 -1,548 -1,607 -1,558 -1,569 -1,589 -20
38 Private remittances and other transfers.................................... -51,349 -12,973 -13,998 -9,312 -15,066 -15,666 -15,348 -5,635 9,713
December 16, 2005
Table 1. U.S. International Transactions (Continued)
[Millions of dollars, quarters seasonally adjusted]
2004 2005 Change:
(Credits +, debits -) 2004 2005
I II III IV I II r III p II-III
Capital and financial account
Capital account
39 Capital account transactions, net............................................. -1,648 -428 -372 -393 -455 -4,466 -315 -311 4
Financial account
40 U.S.-owned assets abroad, net (increase/financial outflow (-))................ -855,509 -295,140 -133,886 -137,525 -288,957 -81,510 -225,202 -124,020 101,182
41 U.S. official reserve assets, net.......................................... 2,805 557 1,122 429 697 5,331 -797 4,766 5,563
42 Gold................................................................... .... .... .... .... .... .... .... .... ....
43 Special drawing rights................................................. -398 -100 -90 -98 -110 1,713 -97 2,976 3,073
44 Reserve position in the International Monetary Fund.................... 3,826 815 1,345 676 990 3,763 -564 1,951 2,515
45 Foreign currencies..................................................... -623 -158 -133 -149 -183 -145 -136 -161 -25
46 U.S. Government assets, other than official reserve assets, net............ 1,215 727 -2 -11 501 4,487 971 562 -409
47 U.S. credits and other long-term assets................................ -3,044 -561 -668 -1,270 -545 -519 -708 -383 325
48 Repayments on U.S. credits and other long-term assets.................. 4,221 1,374 544 1,299 1,004 1,083 1,586 961 -625
49 U.S. foreign currency holdings and U.S. short-term assets, net......... 38 -86 122 -40 42 3,923 93 -16 -109
50 U.S. private assets, net................................................... -859,529 -296,424 -135,006 -137,943 -290,155 -91,328 -225,376 -129,348 96,028
51 Direct investment...................................................... -252,012 -52,367 -58,425 -41,222 -99,997 -26,997 -21,390 27,072 48,462
52 Foreign securities..................................................... -102,383 -15,532 -30,181 -38,444 -18,226 -38,675 -41,979 -33,954 8,025
53 U.S. claims on unaffiliated foreigners reported by
U.S. nonbanking concerns........................................... -149,001 -55,452 -5,390 -13,490 -74,669 -74,934 8,978 -14,599 -23,577
54 U.S. claims reported by U.S. banks, not included elsewhere............. -356,133 -173,073 -41,010 -44,787 -97,263 49,278 -170,985 -107,867 63,118
55 Foreign-owned assets in the United States, net (increase/financial inflow (+)) 1,440,105 423,023 304,937 254,228 457,915 243,451 375,816 396,919 21,103
56 Foreign official assets in the United States, net.......................... 394,710 147,401 77,039 75,792 94,478 25,277 82,646 38,394 -44,252
57 U.S. Government securities............................................. 311,133 124,010 63,456 66,899 56,768 39,244 44,068 30,122 -13,946
58 U.S. Treasury securities........................................... 272,648 112,586 62,977 55,357 41,728 14,306 22,448 9,651 -12,797
59 Other.............................................................. 38,485 11,424 479 11,542 15,040 24,938 21,620 20,471 -1,149
60 Other U.S. Government liabilities...................................... 488 -109 45 710 -158 -650 297 709 412
61 U.S. liabilities reported by U.S. banks, not included elsewhere........ 70,329 22,058 11,350 4,867 32,054 -15,843 34,190 826 -33,364
62 Other foreign official assets.......................................... 12,760 1,442 2,188 3,316 5,814 2,526 4,091 6,737 2,646
63 Other foreign assets in the United States, net............................. 1,045,395 275,622 227,898 178,436 363,437 218,174 293,170 358,525 65,355
64 Direct investment...................................................... 106,832 8,503 31,039 35,666 31,622 35,056 14,454 38,773 24,319
65 U.S. Treasury securities............................................... 106,958 31,931 60,424 -1,107 15,710 75,911 9,923 40,863 30,940
66 U.S. securities other than U.S. Treasury securities.................... 369,793 45,476 81,678 84,401 158,238 79,973 114,064 160,669 46,605
67 U.S. currency.......................................................... 14,827 -1,800 8,754 2,560 5,313 1,072 4,507 4,679 172
68 U.S. liabilities to unaffiliated foreigners reported by
U.S. nonbanking concerns........................................... 124,358 44,623 3,887 14,752 61,096 93,897 1,153 24,845 23,692
69 U.S. liabilities reported by U.S. banks, not included elsewhere........ 322,627 146,889 42,116 42,164 91,458 -67,735 149,069 88,696 -60,373
70 Statistical discrepancy (sum of above items with sign reversed)............... 85,126 18,646 -4,044 50,672 19,856 41,193 47,482 -76,767 -124,249
Memoranda:
71 Balance on goods (lines 3 and 20)............................................. -665,390 -151,452 -163,987 -167,775 -182,176 -186,329 -186,929 -197,925 -10,996
72 Balance on services (lines 4 and 21).......................................... 47,807 12,600 11,945 10,310 12,955 13,277 13,330 15,130 1,800
73 Balance on goods and services (lines 2 and 19)................................ -617,583 -138,852 -152,042 -157,465 -169,221 -173,052 -173,599 -182,795 -9,196
74 Balance on income (lines 12 and 29)........................................... 30,439 15,022 5,922 6,254 3,236 643 -1,541 512 2,053
75 Unilateral current transfers, net (line 35)................................... -80,930 -22,271 -20,515 -15,771 -22,374 -26,259 -22,641 -13,538 9,103
76 Balance on current account (lines 1, 18, and 35 or lines 73, 74, and 75)...... -668,074 -146,101 -166,635 -166,982 -188,359 -198,668 -197,781 -195,821 1,960
r Revised
p Preliminary
NOTE: Details may not add to totals because of rounding. Source: U. S. Bureau of Economic Analysis
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