News Release
U.S. International Investment Position, 2005
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Elena L. Nguyen: (202) 606-9555 BEA 06-29
Christopher A. Gohrband: (202) 606-9564
U.S. Net International Investment Position at Yearend 2005
The U.S. net international investment position at yearend 2005 was -$2,693.8
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 2004, the U.S. net international investment position
was -$2,360.8 billion (revised).
The -$333.0 billion change in the net investment position from yearend 2004
to yearend 2005 was largely due to record private net foreign purchases of U.S.
securities, including U.S. Treasury securities, and to depreciation of most major
foreign currencies against the U.S. dollar, which lowered the dollar value of
U.S.-owned assets abroad. The impact of these net purchases and exchange-rate
changes was largely offset by price appreciation of U.S.-held foreign stocks that
surpassed by a large amount price appreciation of foreign-held U.S. stocks.
With direct investment valued at the current stock market value of owners'
equity, the net investment position was -$2,546.2 billion (preliminary) at yearend
2005, compared with -$2,448.7 billion (revised) at yearend 2004. The -$97.4 billion
change in the net investment position on this basis resulted from the same factors
as above. Price increases on direct investment were larger on this basis than with
direct investment valued at current cost. Other highlights include:
Foreign acquisitions of assets in the United States were $1,212.3 billion
in 2005, down from $1,450.2 billion in 2004. Foreign official acquisitions
were $199.5 billion, down from last year's record $387.8 billion, as a result
of sharply reduced net purchases of U.S. Treasury securities. Partly offsetting
were stronger private net foreign purchases of U.S. securities, including U.S.
Treasury securities. Net private foreign purchases of U.S. Treasury securities
were a record $199.5 billion, up from $102.9 billion. Net private foreign
purchases of U.S. securities other than U.S. Treasury securities were a record
$474.1 billion, up from $381.5 billion in 2004, of which net purchases of U.S.
bonds were $388.4 billion, up from $321.9 billion, and net purchases of U.S.
stocks were $85.8 billion, up from $59.5 billion. U.S. banks' liabilities
increased $179.8 billion, down from last year's increase of $336.7 billion,
and U.S. nonbanks' liabilities increased $30.1 billion, down from $93.3 billion.
Foreign direct investment in the United States increased $109.8 billion, down
from an increase of $133.2 billion.
U.S. acquisitions of assets abroad were $426.8 billion in 2005, down from a
record $867.8 billion in 2004, as U.S. direct investment abroad and U.S. banks'
and nonbanks' claims slowed sharply from last year's pace. U.S. direct
investment abroad increased only $9.1 billion, down from an increase of $244.1
billion in 2004. U.S. banks' claims increased $213.0 billion, down from an
increase of $361.6 billion in 2004, and U.S. nonbanks' claims increased $44.2
billion, down from an increase of $120.0 billion. In contrast, net U.S.
purchases of foreign securities, mostly foreign stocks, increased to $180.1
billion from $146.5 billion.
Price appreciation in most foreign stock markets substantially increased the
value of U.S. holdings of foreign corporate stocks and the value of owners'
equity of U.S. direct investment abroad on a market-value basis. Price
appreciation in the U.S. stock market also increased the value of foreign
holdings of U.S. corporate stocks, but by a much smaller amount.
Depreciation of most major foreign currencies against the U.S. dollar from
yearend 2004 to yearend 2005 lowered the dollar value of U.S.-owned assets
abroad, especially the value of U.S.-owned foreign corporate stocks and U.S.
direct investment abroad at market value.
______________________________________________________________________________
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 $822.0 billion to $10,008.7 billion with
U.S. direct investment abroad valued at current cost, and they increased $1,003.9
billion to $11,079.2 billion with U.S. direct investment abroad valued at market value.
U.S. holdings of foreign securities increased $520.6 billion to $4,074.0
billion. Holdings of foreign stocks increased as a result of large price
appreciation and record net U.S. purchases, which were partly offset by
exchange-rate depreciation. Holdings of foreign bonds decreased as a result of
price depreciation and exchange-rate depreciation that more than offset net U.S.
purchases.
U.S. direct investment abroad valued at current cost increased $54.7 billion
to $2,453.9 billion, mostly as a result of price appreciation. Financial
transactions increased U.S. direct investment abroad $9.1 billion, down sharply
from last year's increase of $244.1 billion, largely as a result of tax incentives
provided by the American Jobs Creation Act that encouraged the payment of dividends
by foreign affiliates to their U.S. parent companies. At market value, U.S. direct
investment abroad increased $236.6 billion to $3,524.5 billion, reflecting strong
price appreciation of owners' equity resulting from an increase in foreign stock
prices. Partly offsetting was exchange-rate depreciation.
Claims on foreigners reported by U.S. banks increased $202.8 billion to
$2,430.7 billion.
Claims on unaffiliated foreigners reported by U.S. nonbanking concerns
increased $51.0 billion to $784.5 billion.
U.S. official reserve assets decreased $1.5 billion to $188.0 billion.
Foreign-owned assets in the United States increased $1,155.0 billion to
$12,702.5 billion with foreign direct investment in the United States valued at
current cost, and they increased $1,101.3 billion to $13,625.4 billion with
foreign direct investment in the United States valued at market value.
Foreign official assets in the United States increased $214.7 billion to
$2,216.1 billion. Net purchases of U.S. Government securities accounted for most
of the increase.
Foreign holdings of U.S. securities other than U.S. Treasury securities,
excluding official holdings, increased $395.2 billion to $4,390.7 billion.
Foreign holdings of U.S. bonds increased as a result of strong net foreign
purchases, which were partly offset by price depreciation. Foreign holdings of
U.S. stocks increased as a result of net foreign purchases and price appreciation.
Foreign holdings of U.S. Treasury securities, excluding official holdings,
increased $142.6 billion to $704.9 billion as a result of strong net foreign
purchases.
U.S. liabilities to private foreigners and international financial
institutions reported by U.S. banks increased $179.9 billion to $2,600.6 billion.
Liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns
increased $56.1 billion to $563.7 billion.
Foreign direct investment in the United States valued at current cost
increased $147.2 billion to $1,874.3 billion, mostly as a result of financial
transactions. At market value, foreign direct investment in the United States
increased $93.5 billion to $2,797.2 billion.
U.S. currency held by foreigners increased $19.4 billion to $352.2 billion.
* * *
Revisions
The previously published net international investment position in 2004 was
-$2,484.2 billion with direct investment at current cost and -$2,542.2 billion
with direct investment at market value. This year, the estimates of U.S. holdings
of foreign securities for 2003-2004 were revised to incorporate results from the
U.S. Treasury Department's Annual Survey of U.S. Portfolio Investment Abroad as
of December 31, 2004. The estimates of foreign holdings of U.S. securities for
2003-2004 were revised to incorporate results from the U.S. Treasury Department's
Annual Survey of Foreign Portfolio Investment in the United States as of
June 30, 2005. These estimates also included the incorporation of revised results
from the U.S. Treasury Department's Benchmark Survey of Foreign Portfolio
Investment in the United States as of June 30, 2004. The estimates of short-term
U.S. Treasury securities and other short-term instruments reported by U.S. banks
for 2003-2004 were also revised to incorporate results from the U.S. Treasury
Department's Annual Survey of Foreign Portfolio Investment in the United States as
of June 30, 2005. The estimates of foreign direct investment in the United States
for 2002-2004 were revised to incorporate results from BEA's benchmark survey of
foreign direct investment in the United States for 2002.
In addition to the above improvements, all estimates are revised as a result
of newly available or revised quarterly source data. Revisions attributable to
these updated source data are for 2002-2004. The net result of revisions from
all sources raised the value of U.S. assets abroad relative to the value of
foreign assets in the United States for 2002-2004.
A more detailed discussion of the U.S. net international investment
position in 2005 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 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.
Table 1. International Investment Position of the United States at Yearend, 2004 and 2005
[Millions of dollars]
Changes in position in 2005 (decrease (-), increase (+))
Attributable to:
Valuation adjustments
Line Type of investment
Position, Position,
2004/r/ Exchange- 2005/p/
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 24)............ -2,360,785 -785,449 625,441 -226,283 53,277 -333,014 -2,693,799
2 With direct investment positions at market value (line 4 less line 25)............ -2,448,744 -785,449 1,061,360 -393,614 20,272 -97,431 -2,546,175
U.S.-owned assets abroad:
3 With direct investment positions at current cost (lines 5+10+15)................ 9,186,661 426,801 608,509 -278,993 65,698 822,015 10,008,676
4 With direct investment positions at market value (lines 5+10+16)................ 10,075,337 426,801 993,566 -444,317 27,815 1,003,865 11,079,202
5 U.S. official reserve assets...................................................... 189,591 -14,096 20,241 -7,680 -13 -1,548 188,043
6 Gold............................................................................ 113,947 .... /3/20,241 .... /4/-13 20,228 134,175
7 Special drawing rights.......................................................... 13,628 -4,511 .... -907 .... -5,418 8,210
8 Reserve position in the International Monetary Fund............................. 19,544 -10,200 .... -1,308 .... -11,508 8,036
9 Foreign currencies.............................................................. 42,472 615 .... -5,465 .... -4,850 37,622
10 U.S. Government assets, other than official reserve assets........................ 83,062 -5,539 .... .... .... -5,539 77,523
11 U.S. credits and other long-term assets /5/..................................... 80,308 -3,348 .... .... .... -3,348 76,960
12 Repayable in dollars.......................................................... 80,035 -3,348 .... .... .... -3,348 76,687
13 Other /6/..................................................................... 273 .... .... .... .... .... 273
14 U.S. foreign currency holdings and U.S. short-term assets....................... 2,754 -2,191 .... .... .... -2,191 563
U.S. private assets:
15 With direct investment at current cost (lines 17+19+22+23).................... 8,914,008 446,436 588,268 -271,313 65,711 829,102 9,743,110
16 With direct investment at market value (lines 18+19+22+23).................... 9,802,684 446,436 973,325 -436,637 27,828 1,010,952 10,813,636
Direct investment abroad:
17 At current cost............................................................... 2,399,224 9,072 42,085 -32,112 35,664 54,709 2,453,933
18 At market value............................................................... 3,287,900 9,072 427,142 -197,436 -2,219 236,559 3,524,459
19 Foreign securities.............................................................. 3,553,387 180,125 546,183 -205,698 .... 520,610 4,073,997
20 Bonds......................................................................... 992,969 37,991 -20,533 -22,884 .... -5,426 987,543
21 Corporate stocks.............................................................. 2,560,418 142,134 566,716 -182,814 .... 526,036 3,086,454
22 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns..... 733,538 44,221 .... -18,151 24,913 50,983 784,521
23 U.S. claims reported by U.S. banks, not included elsewhere...................... 2,227,859 213,018 .... -15,352 5,134 202,800 2,430,659
Foreign-owned assets in the United States:
24 With direct investment at current cost (lines 26+33)............................ 11,547,446 1,212,250 -16,932 -52,710 12,421 1,155,029 12,702,475
25 With direct investment at market value (lines 26+34)............................ 12,524,081 1,212,250 -67,794 -50,703 7,543 1,101,296 13,625,377
26 Foreign official assets in the United States...................................... 2,001,407 199,495 -26,059 .... 41,280 214,716 2,216,123
27 U.S. Government securities...................................................... 1,499,293 156,450 -28,661 .... 22,315 150,104 1,649,397
28 U.S. Treasury securities...................................................... 1,241,250 71,749 -21,682 .... -2,436 47,631 1,288,881
29 Other......................................................................... 258,043 84,701 -6,979 .... 24,751 102,473 360,516
30 Other U.S. Government liabilities /7/........................................... 16,488 -488 .... .... .... -488 16,000
31 U.S. liabilities reported by U.S. banks, not included elsewhere................. 270,387 24,275 .... .... .... 24,275 294,662
32 Other foreign official assets................................................... 215,239 19,258 2,602 .... 18,965 40,825 256,064
Other foreign assets:
33 With direct investment at current cost (lines 35+37+38+41+42+43).............. 9,546,039 1,012,755 9,127 -52,710 -28,859 940,313 10,486,352
34 With direct investment at market value (lines 36+37+38+41+42+43).............. 10,522,674 1,012,755 -41,735 -50,703 -33,737 886,580 11,409,254
Direct investment in the United States:
35 At current cost............................................................... 1,727,062 109,754 27,950 -2,007 11,504 147,201 1,874,263
36 At market value............................................................... 2,703,697 109,754 -22,912 .... 6,626 93,468 2,797,165
37 U.S. Treasury securities........................................................ 562,288 199,491 -7,671 .... -49,233 142,587 704,875
38 U.S. securities other than U.S. Treasury securities............................. 3,995,506 474,140 -11,152 -29,411 -38,401 395,176 4,390,682
39 Corporate and other bonds..................................................... 2,035,149 388,357 -72,646 -29,411 -46,252 240,048 2,275,197
40 Corporate stocks.............................................................. 1,960,357 85,783 61,494 .... 7,851 155,128 2,115,485
41 U.S.currency.................................................................... 332,735 19,416 .... .... .... 19,416 352,151
42 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns 507,668 30,105 .... -10,309 36,285 56,081 563,749
43 U.S. liabilities reported by U.S. banks, not included elsewhere................. 2,420,780 179,849 .... -10,983 10,986 179,852 2,600,632
p Preliminary.
r Revised.
1. Represents gains or losses on foreign-currency-denominated assets and liabilities due to their revaluation at current exchange rates.
2. Includes changes in coverage, capital gains and losses of direct investment affiliates, and other adjustments to the value of assets and liabilities.
3. Reflects changes in the value of the official gold stock due to fluctuations in the market price of gold.
4. Reflects changes in gold stock from U.S. Treasury sales of gold medallions and commemorative and bullion coins; also reflects replenishment through open market purchases.
These demonetizations/monetizations are not included in international transactions financial flows.
5. Also includes paid-in capital subscriptions to international financial institutions and resources provided to foreigners under foreign assistance programs requiring
repayment over several years. Excludes World War I debts that are not being serviced.
6. Includes indebtedness that the borrower may contractually, or at its option, repay with its currency, with a third country's currency, or by delivery of materials or transfer
of services.
7. Primarily U.S. Government liabilities associated with military sales contracts and other transactions arranged with or through foreign official agencies.
Source: Bureau of Economic Analysis