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Patricia E. Abaroa: (202) 606-9591 BEA 04-34
Christopher A. Gohrband: (202) 606-9564
U.S. Net International Investment Position at Yearend 2003
The U.S. net international investment position at yearend 2003 was a negative
$2,430.7 billion (preliminary) with direct investment valued at current cost, as the value
of foreign investments in the United States exceeded the value of U.S. investments
abroad (Table 1). At yearend 2002, the U.S. net international investment position was a
negative $2,233.0 billion (revised).
The net investment position became $197.7 billion more negative from yearend
2002 to yearend 2003, mainly due to large net foreign purchases of U.S. securities
(mostly of corporate bonds and U.S. Treasury securities). Partly offsetting this impact,
appreciation of most foreign currencies against the U.S. dollar raised the dollar value of
U.S.-owned assets abroad, especially of U.S.-held foreign stocks. Substantial increases
in stock market prices raised the value of U.S. portfolio investment abroad somewhat
more than it raised the value of foreign portfolio investment in the United States.
With direct investment valued at the current stock market value of owners' equity,
the negative net investment position was $2,651.0 billion (preliminary) at yearend 2003,
compared with $2,553.4 billion (revised) at yearend 2002. The $97.6 billion change in
the net investment position on this basis resulted from the same factors as above. Other
highlights include:
In regard to transactions, foreign acquisitions of assets in the United States in
2003 were $829.2 billion, up from $768.2 billion in 2002, and the second largest
on record after $1,046.9 billion in 2000. Foreign official acquisitions of assets
more than doubled from 2002, to the highest level on record. The increase was
largely accounted for by net foreign official purchases of U.S. Treasury securities.
Net foreign purchases of U.S. Treasury securities by private foreigners also
picked up, and inflows reported by U.S. nonbanks increased somewhat. Net
foreign purchases of U.S. securities other than U.S. Treasury securities slowed for
the third consecutive year; net foreign purchases of U.S. stocks slowed and
transactions in U.S. agency bonds shifted to net foreign sales, more than offsetting
a sharp increase in net foreign purchases of U.S. corporate bonds to a record level.
Foreign direct investment in the United States slowed to the smallest increase
since 1992, and inflows reported by U.S. banks also slowed.
U.S. acquisitions of assets abroad in 2003 were $283.4 billion, up from $198.0
billion in 2002, and down from a record $569.8 billion in 2000. U.S. investors
shifted back to net purchases of foreign securities after having been net sellers for
the first time in 2002; net U.S. purchases of foreign stocks increased substantially
and net U.S. sales of foreign bonds declined. U.S. direct investment abroad rose
to the highest level of outflows since the record in 1999. U.S. banks' claims on
foreigners slowed to the smallest increase since 1994, and the increase in U.S.
nonbanks' claims on foreigners also slowed.
Price appreciation of U.S. stocks increased the value of foreign holdings of U.S.
stocks and increased the value of owners' equity of foreign direct investment in
the United States on a market-value basis. Price appreciation of foreign stocks
also increased the value of U.S. holdings of foreign stocks and increased the value
of owners' equity of U.S. direct investment abroad on a market-value basis.
Appreciation of most foreign currencies against the U.S. dollar from yearend
2002 to yearend 2003 raised the dollar value of all foreign-currency-denominated
assets and liabilities, especially the value of U.S.-held foreign stocks and U.S.
direct investment abroad.
_________________________________________________________________________________________
Valuation Methods for Direct Investment
The current-cost method values the U.S. and foreign parents' share of their affiliates'
investment in plant and equipment using the current cost of capital equipment, in land
using general price indexes, and in inventories using estimates of their replacement cost.
The market-value method values the owners' equity component of the direct investment
position using indexes of stock market prices.
The historical-cost method values all assets and liabilities at their book value. Country
and industry detail can be shown only under this method. Data on this basis are not
presented in this release.
_________________________________________________________________________________________
U.S.-owned assets abroad increased $789.2 billion to $7,202.7 billion with U.S.
direct investment valued at current cost, and they increased $1,250.6 billion to $7,864.0
billion with U.S. direct investment valued at market value.
U.S. holdings of foreign securities increased $627.5 billion to $2,474.4 billion.
Holdings of foreign stocks increased sharply as a result of large price appreciation, the
appreciation of foreign currencies against the U.S. dollar, and net U.S. purchases.
Holdings of foreign bonds were nearly unchanged as price appreciation and exchange-
rate appreciation were largely offset by net U.S. sales.
U.S. direct investment abroad at current cost increased $229.0 billion to $2,069.0
billion; at market value, it increased $690.5 billion to $2,730.3 billion. In 2003, net
financial outflows rose to $173.8 billion, but remained below record outflows of $224.9
billion in 1999. At both current cost and market value, financial outflows, exchange-rate
appreciation of foreign currencies, and price appreciation all contributed to the increase
in U.S. direct investment abroad.
Claims on foreigners reported by U.S. banks increased $201.6 billion to $1,776.3
billion. Most of the increase was due to "other" changes, reflecting a change in the
statistical reporting system that has shifted some assets from U.S. claims reported by
nonbanking concerns to U.S. claims reported by U.S. banks. Financial outflows from
banks were the smallest since 1994.
Claims on unaffiliated foreigners reported by U.S. nonbanking concerns
decreased $293.4 billion to $614.7 billion. Changes in the statistical reporting system
and related changes in the methodology for calculating nonbank transactions and
positions led to a substantial decline in the transactions and positions covered by the
nonbank category; these changes are reflected in the estimate of "other" changes.
U.S. official reserve assets increased $25.0 billion to $183.6 billion, largely as a
result of strong price appreciation in the market value of the U.S. gold stock and of
exchange-rate appreciation.
Foreign-owned assets in the United States increased $986.8 billion to $9,633.4
billion with foreign direct investment valued at current cost, and they increased $1,348.2
billion to $10,515.0 billion with foreign direct investment valued at market value.
Foreign holdings of U.S. securities other than U.S. Treasury securities, excluding
official holdings, increased $604.4 billion to $3,391.1 billion. Foreign holdings of U.S.
stocks increased as a result of a price appreciation and net foreign purchases. Foreign
holdings of U.S. bonds increased as a result of net foreign purchases, exchange-rate
appreciation of foreign currencies, and price appreciation.
U.S. liabilities to private foreigners and international financial institutions
reported by U.S. banks increased $368.8 billion, to $1,887.2 billion. Most of the increase
was due to "other" changes, reflecting a change in the statistical reporting system that has
shifted some liabilities from U.S. liabilities reported by nonbanking concerns to U.S.
liabilities reported by U.S. banks. Financial inflows to banks slowed in 2003.
Foreign official assets in the United States increased $261.4 billion to $1,474.2
billion, the largest increase on record. The increase was mostly in purchases of U.S.
Treasury securities.
Foreign holdings of U.S. Treasury securities, excluding official holdings,
increased $84.9 billion to $542.5 billion. Sizable net foreign purchases more than offset
price depreciation.
Foreign direct investment in the United States valued at current cost increased
$48.8 billion to $1,554.0 billion, mostly as a result of net financial inflows. At market
value, foreign direct investment in the United States increased $410.2 billion to $2,435.5
billion, mostly as a result of price appreciation in owners' equity resulting from an
increase in U.S. stock prices. At both current cost and market value, net financial inflows
slowed to $39.9 billion, the smallest increase since 1992.
U.S. currency held by foreigners increased $16.6 billion to $317.9 billion.
Liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns
decreased $398.1 billion to $466.5 billion. Changes in the statistical reporting system
and related changes in the methodology for calculating nonbank transactions and
positions led to a substantial decline in the transactions and positions covered by the
nonbank category; these changes were reflected in the estimate of "other" changes.
* * *
Revisions
The previously published net international investment position in 2002 at current
cost was a negative $2,387.2 billion, and at market value was a negative $2,605.2 billion.
This year, the estimates of foreign portfolio holdings of U.S. securities for 2000-
2002 were revised to incorporate results from the U.S. Treasury Department's annual
surveys of securities liabilities for June 2002 and June 2003. In addition, the estimates of
U.S. portfolio holdings of foreign securities for 1994-1996 were revised to extend to
these years the major methodological changes made in June 2003 at the time of the
incorporation of the U.S. Treasury Department's Benchmark Survey of U.S. Portfolio
Investment Abroad as of December 31, 2001.
Classification and methodology changes have been made to the bank and nonbank
accounts. Positions of securities brokers and dealers have been reclassified to the bank
accounts from the nonbank accounts. Methodology changes have identified some
double-counting of transactions and positions in the counterparty country source data
used to prepare the estimates; the duplicate coverage has now been removed from the
accounts. Both of these changes are reflected in the "other" changes column of table 1.
In addition to the above improvements, all estimates are revised as a result of
newly available or revised quarterly and annual survey results and other data. Revisions
attributable to updated source data are for 1994-2002. The net result of revisions from all
sources is to raise the value of U.S. assets abroad relative to the value of foreign assets in
the United States for recent years.
A more detailed discussion of the U.S. net international investment position in
2003 and revised historical data will appear in the July issue of the Survey of Current
Business. That issue will also contain an article about historical-cost direct investment
positions, with detail by country and industry, and revised direct investment historical
data.
* * *
BEA's major national, regional, international, and industry estimates, the Survey
of Current Business, and BEA news releases are available on BEA's Web site:
<www.bea.gov>
Most of BEA's estimates and analyses appear in the Survey of Current Business,
BEA's monthly journal. Subscriptions and single copies of the printed Survey are for
sale by the Superintendent of Documents, U.S. Government Printing Office. Internet:
<bookstore.gpo.gov>; phone: (202) 512-1800; fax: (202) 512-2250; mail: Stop SSOP,
Washington, DC 20402-0001.
Table 1. International Investment Position of the United States at Yearend, 2002 and 2003
[Millions of dollars]
Changes in position in 2003 (decrease (-), increase (+))
Attributable to
Line Type of investment Position, Position,
2002/r/ Valuation adjustments 2003/p/
Exchange-
Financial Price rate Other
flows changes changes/1/ changes/2/ Total
(a) (b) (c) (d) (a+b+c+d)
Net international investment position of the United States:
1 With direct investment positions at current cost (line 3 less line 16)................. -2,233,018 -545,759 37,112 255,457 55,526 -197,664 -2,430,682
2 With direct investment positions at market value (line 4 less line 17)................. -2,553,407 -545,759 -13,696 397,918 63,954 -97,583 -2,650,990
U.S.-owned assets abroad:
3 With direct investment at current cost (lines 5+6+7)................................ 6,413,535 283,414 355,668 327,520 -177,445 789,157 7,202,692
4 With direct investment at market value (lines 5+6+8)................................ 6,613,320 283,414 676,650 468,722 -178,138 1,250,648 7,863,968
5 U.S. official reserve assets........................................................ 158,602 -1,523 18,059 8,438 1 24,975 183,577
6 U.S. Government assets, other than official reserve assets.......................... 85,309 -537 .... .... .... -537 84,772
U.S. private assets:
7 With direct investment at current cost (lines 9+11+14+15)........................ 6,169,624 285,474 337,609 319,082 -177,446 764,719 6,934,343
8 With direct investment at market value (lines 10+11+14+15)....................... 6,369,409 285,474 658,591 460,284 -178,139 1,226,210 7,595,619
Direct investment abroad:
9 At current cost............................................................... 1,839,995 173,799 9,472 58,756 -13,009 229,018 2,069,013
10 At market value............................................................... 2,039,780 173,799 330,454 199,958 -13,702 690,509 2,730,289
11 Foreign securities............................................................... 1,846,879 72,337 328,137 227,021 .... 627,495 2,474,374
12 Bonds......................................................................... 501,762 -28,094 3,209 25,253 .... 368 502,130
13 Corporate stocks.............................................................. 1,345,117 100,431 324,928 201,768 .... 627,127 1,972,244
14 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns...... 908,024 28,932 .... 18,093 -340,377 -293,352 614,672
15 U.S. claims reported by U.S. banks, not included elsewhere....................... 1,574,726 10,406 .... 15,212 175,940 201,558 1,776,284
Foreign-owned assets in the United States:
16 With direct investment at current cost (lines 18+19)................................ 8,646,553 829,173 318,556 72,063 -232,971 986,821 9,633,374
17 With direct investment at market value (lines 18+20)................................ 9,166,727 829,173 690,346 70,804 -242,092 1,348,231 10,514,958
18 Foreign official assets in the United States........................................ 1,212,723 248,573 3,920 .... 8,945 261,438 1,474,161
Other foreign assets:
19 With direct investment at current cost (lines 21+23+24+27+28+29)................. 7,433,830 580,600 314,636 72,063 -241,916 725,383 8,159,213
20 With direct investment at market value (lines 22+23+24+27+28+29)................. 7,954,004 580,600 686,426 70,804 -251,037 1,086,793 9,040,797
Direct investment in the United States:
21 At current cost............................................................... 1,505,171 39,890 6,460 1,259 1,175 48,784 1,553,955
22 At market value............................................................... 2,025,345 39,890 378,250 .... -7,946 410,194 2,435,539
23 U.S. Treasury securities......................................................... 457,670 113,432 -11,612 .... -16,948 84,872 542,542
24 U.S. securities other than U.S. Treasury securities.............................. 2,786,647 250,981 319,788 48,437 -14,803 604,403 3,391,050
25 Corporate and other bonds..................................................... 1,600,414 213,718 5,205 48,437 -14,803 252,557 1,852,971
26 Corporate stocks.............................................................. 1,186,233 37,263 314,583 .... .... 351,846 1,538,079
27 U.S. currency.................................................................... 301,268 16,640 .... .... .... 16,640 317,908
28 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns. 864,632 84,014 .... 11,269 -493,372 -398,089 466,543
29 U.S. liabilities reported by U.S. banks, not included elsewhere.................. 1,518,442 75,643 .... 11,098 282,032 368,773 1,887,215
p Preliminary.
r Revised.
1. Represents gains or losses on foreign-currency-denominated assets due to their revaluation at current exchange rates.
2. Includes changes in coverage, capital gains and losses of direct investment affiliates, and other statistical adjustments to the value of assets.
Source: Bureau of Economic Analysis
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