Current-Account Balance, Fourth Quarter

The U.S. current-account deficit decreased to $112.4 billion (preliminary) in the fourth
quarter of 2016 from $116.0 billion (revised) in the third quarter of 2016, according to
statistics released by the Bureau of Economic Analysis (BEA).  The deficit decreased to 2.4
percent of current-dollar gross domestic product (GDP) from 2.5 percent in the third quarter.

The $3.6 billion decrease in the current-account deficit mostly reflected a $19.9 billion
increase in the surplus on primary income that was largely offset by a $17.5 billion increase
in the deficit on goods.  The changes in the surplus on services and the deficit on secondary
income were relatively small.

                   Current-Account Transactions, Fourth Quarter (tables 1-5)

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $4.0 billion in the fourth quarter
to $804.0 billion.

    * Primary income receipts increased $4.4 billion to $207.9 billion, reflecting increases in
      direct investment income, largely income on equity, and in portfolio investment income,
      largely reflecting interest on long-term debt securities.

    * Goods exports decreased $3.4 billion to $371.7 billion, partly offsetting the increase in
      primary income receipts.  The decrease reflected an $8.4 billion decrease in exports of
      foods, feeds, and beverages, largely soybeans, that was partly offset by a net increase
      in other major categories.

Imports of goods and services and income payments

Imports of goods and services and income payments increased $0.4 billion to $916.4 billion.

    * Goods imports increased $14.1 billion to $567.9 billion.  Increases were largest in
      industrial supplies and materials and in consumer goods except food and automotive.

    * Primary income payments decreased $15.4 billion to $146.5 billion, mostly offsetting the
      increase in goods imports and small increases in secondary income payments and services
      imports.  The decrease reflected a $19.9 billion decrease in direct investment income
      that was concentrated in earnings of U.S. affiliates in wholesale trade and mostly
      resulted from charges against earnings related to legal settlements.  The decrease in
      direct investment income was partly offset by an increase in portfolio investment income,
      primarily interest on long-term debt securities.

                   Financial Account, Fourth Quarter (tables 1, 6, 7, and 8)

Net U.S. borrowing measured by financial-account transactions was $92.0 billion in the fourth
quarter, a decrease from net borrowing of $224.4 billion in the third quarter.  A decrease in
net U.S. incurrence of liabilities excluding financial derivatives was partly offset by a shift
to net U.S. liquidation of financial assets excluding financial derivatives and a shift to net
borrowing in financial derivatives other than reserves.

Financial assets

Transactions in financial assets excluding financial derivatives shifted to net U.S.
liquidation of $79.1 billion in the fourth quarter from net U.S. acquisition of $28.3 billion
in the third quarter.

    * Net U.S. liquidation of other investment assets increased $95.5 billion, reflecting a
      shift to net foreign repayment of loans from net U.S. provision in the third quarter.

    * Net U.S. acquisition of direct investment assets decreased $13.9 billion to $80.7 billion,
      reflecting a shift to net repayment of debt by foreign affiliates to their U.S. parents.

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives decreased $246.8 billion to
$12.4 billion.

    * Net U.S. incurrence of portfolio investment liabilities decreased $157.0 billion to $61.6
      billion, reflecting a shift to net foreign sales of U.S. equity and investment fund
      shares that was partly offset by an increase in net foreign purchases of U.S. long-term
      debt securities.

    * Net U.S. incurrence of direct investment liabilities decreased $91.7 billion to $33.0
      billion, reflecting a decrease in net incurrence of equity liabilities and a shift to net
      U.S. repayment of debt instrument liabilities.

Financial derivatives

Transactions in financial derivatives other than reserves reflected fourth-quarter net
borrowing of $0.4 billion, a shift from net lending of $6.5 billion in the third quarter.

                       Statistical Discrepancy, Fourth Quarter (table 1)

The statistical discrepancy shifted to $20.4 billion in the fourth quarter from -$108.4 billion
in the third quarter.

          Updates to Third Quarter 2016 International Transactions Accounts Aggregates
                           Billions of dollars, seasonally adjusted

                                                       Preliminary estimate    Revised estimate
Current-account balance                                       -113.0               -116.0
  Goods balance                                               -177.7               -178.7
  Services balance                                              61.3                 62.4
  Primary-income balance                                        43.4                 41.6
  Secondary-income balance                                     -39.9                -41.4
Net lending (+)/borrowing (-) from
  financial-account transactions                              -207.9               -224.4
Statistical discrepancy                                        -95.0               -108.4

                              Current-Account Balance, Year 2016

The current-account deficit increased to $481.2 billion (preliminary) in 2016 from $463.0
billion in 2015.  The deficit was 2.6 percent of current-dollar GDP in 2016, the same
percentage as in 2015.

The $18.2 billion increase in the deficit reflected a $16.2 billion increase in the deficit on
secondary income, a $12.8 billion decrease in the surplus on services, and a $1.8 billion
decrease in the surplus on primary income.  These changes were partly offset by a $12.6 billion
decrease in the deficit on goods.

                     Current-Account Transactions, Year 2016 (tables 1-5)

Exports of goods and services and income receipts

Exports of goods and services and income receipts decreased $30.5 billion in 2016 to $3,142.2
billion.

    * Goods exports decreased $50.6 billion to $1,459.7 billion, mostly reflecting decreases in
      industrial supplies and materials and in capital goods except automotive.

    * Primary income receipts increased $19.0 billion to $801.9 billion, partly offsetting the
      decrease in goods exports.  The increase in primary income reflected increases in
      portfolio investment income, mostly dividends on equity other than investment fund shares,
      and in other investment income, mostly interest.

Imports of goods and services and income payments

Imports of goods and services and income payments decreased $12.3 billion to $3,623.4 billion.

    * Goods imports decreased $63.3 billion to $2,209.6 billion.  The decrease in goods imports
      was largely offset by increases in primary income payments, secondary income payments, and
      services imports.  The decrease in goods imports primarily reflected a decrease in industrial
      supplies and materials, mostly petroleum and products.

                    Financial Account, Year 2016 (tables 1, 6, 7, and 8)

Net U.S. borrowing measured by financial-account transactions was $406.5 billion in 2016, an
increase from net borrowing of $195.2 billion in 2015.  An increase in net U.S. incurrence of
liabilities excluding financial derivatives was partly offset by an increase in net U.S.
acquisition of financial assets excluding financial derivatives and a shift to net lending from
net borrowing in financial derivatives other than reserves.

Financial assets

Net U.S. acquisition of financial assets excluding financial derivatives increased $105.6
billion in 2016 to $331.0 billion.

    * Net liquidation of other investment assets decreased $231.6 billion to $39.3 billion,
      reflecting a decrease in net withdrawal of U.S. residents’ foreign deposits and a shift
      to net U.S. provision of loans to foreign residents.

    * Net acquisition of portfolio investment assets decreased $133.3 billion to $20.7 billion,
      partly offsetting the decrease in net liquidation of other investment assets.  The
      decrease in net acquisition of portfolio investment assets reflected a shift to net U.S.
      sales of foreign equity and investment fund shares that was partly offset by a shift to
      net U.S. acquisition of foreign debt securities.

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives increased $364.1 billion to
$759.4 billion.

    * Transactions in other investment liabilities shifted to net incurrence of $63.2 billion
      from net repayment of $235.1 billion, primarily reflecting a shift to net incurrence of
      loans from foreigners.

    * Net incurrence of direct investment liabilities increased $45.8 billion to $425.3 billion,
      primarily reflecting an increase in net incurrence of equity liabilities.

Financial derivatives

Transactions in financial derivatives other than reserves shifted to net lending of $22.0
billion in 2016 from net borrowing of $25.4 billion in 2015.

                             Statistical Discrepancy, Year 2016

The statistical discrepancy decreased to $74.8 billion in 2016 from $267.8 billion in 2015.

_______________________________________________________________________________________________

           Notice of Upcoming Update to the U.S. International Transactions Accounts

The annual update of the U.S. International Transactions Accounts will be released along with

preliminary estimates for the first quarter of 2017 on June 20, 2017.  An article previewing
the annual update will appear in the May 2017 issue of the Survey of Current Business.