Comprehensive Restructuring of the U.S. International Economic Accounts

On June 30, 2014, BEA will release "U.S. Net International Investment Position: End of the First Quarter 2014, Year 2013, and Annual Revisions." The statistics will be revised to reflect newly available and more complete source data, changes in estimation methods, and changes in definitions and classifications.

BEA will also introduce a new presentation of the IIP statistics as part of a comprehensive restructuring of BEA's international economic accounts. This change in presentation, combined with changes in definitions and classifications, will bring the statistics into closer alignment with international guidelines. Additional information on BEA's comprehensive restructuring of the international accounts is published in the March 2014 issue of the Survey of Current Business. Table templates for the restructured presentation are available on the BEA Web site at www.bea.gov/international/modern.htm.

Fourth Quarter

The U.S. net international investment position at the end of the fourth quarter of 2013 was -$4,577.5 billion (preliminary) as the value of foreign investments in the United States exceeded the value of U.S. investments abroad (table 1). At the end of the third quarter, the net position was -$4,171.8 billion (revised). The $405.7 billion decrease in the net position reflected a $777.8 billion increase in the value of foreign-owned assets in the United States that exceeded a $372.1 billion increase in the value of U.S.-owned assets abroad.

The U.S. net international investment position decreased 9.7 percent in the fourth quarter, compared with a 6.4-percent increase in the third quarter and an average quarterly decrease of 6.3 percent from the first quarter of 2011 through the third quarter of 2013. The net position was equal to 2.4 percent of the value of all U.S. financial assets at the end of the fourth quarter, up from 2.2 percent at the end of the third quarter.¹

U.S.-owned assets abroad were $21,963.8 billion at the end of the fourth quarter compared with $21,591.7 billion at the end of the third quarter. The $372.1 billion increase reflected a $318.4 billion increase in the value of U.S.-owned assets abroad excluding financial derivatives and a $53.7 billion increase in the value of financial derivatives.

U.S.-owned assets abroad excluding financial derivatives were $19,148.7 billion at the end of the fourth quarter compared with $18,830.2 billion at the end of the third quarter. The $318.4 billion increase reflected a $196.4 billion increase resulting from valuation changes and a $122.1 billion increase resulting from financial outflows.² Valuation changes were mainly attributable to an increase in foreign stock prices that raised the value of U.S. holdings of foreign stocks.

Foreign-owned assets in the United States were $26,541.3 billion at the end of the fourth quarter compared with $25,763.5 billion at the end of the third quarter. The $777.8 billion increase reflected a $749.3 billion increase in the value of foreign-owned assets in the United States excluding financial derivatives and a $28.5 billion increase in the value of financial derivatives.

Foreign-owned assets in the United States excluding financial derivatives were $23,799.4 billion at the end of the fourth quarter compared with $23,050.0 billion at the end of the third quarter. The $749.3 billion increase reflected a $430.6 billion increase resulting from valuation changes and a $318.8 billion increase resulting from financial inflows. Valuation changes were mostly attributable to increases in U.S. stock prices that raised the value of foreign holdings of U.S. stocks. The rise in the value of U.S. stocks was partly offset by declines in the value of U.S. debt securities due to falling bond prices.

Revisions

The U.S. net international investment position at the end of the third quarter of 2013 was revised to -$4,171.8 billion from a previously-published value of -$4,165.6 billion. The $6.2 billion downward revision to the net position reflected a $6.9 billion upward revision to foreign-owned assets in the United States that exceeded a $0.7 billion upward revision to U.S.-owned assets abroad.

U.S.-owned assets abroad at the end of the third quarter were revised to $21,591.7 billion from $21,590.9 billion, and foreign-owned assets in the United States were revised to $25,763.5 billion from $25,756.5 billion. These revisions reflect revised source data from the Treasury International Capital (TIC) reporting system and from BEA’s quarterly surveys of direct investment.

Year 2013

The U.S. net international investment position was -$4,577.5 billion (preliminary) at the end of 2013 compared with -$3,863.9 billion at the end of 2012. The $713.6 billion decrease in the net position reflected a $1,039.8 billion increase in the value of foreign-owned assets in the United States that exceeded a $326.1 billion increase in the value of U.S.-owned assets abroad. The U.S. net international investment position decreased 18.5 percent from the end 2012 to the end of 2013, compared with a 3.6-percent decrease from yearend 2011 to yearend 2012.

U.S.-owned assets abroad were $21,963.8 billion at the end of 2013 compared with $21,637.6 billion at the end of 2012. The $326.1 billion increase reflected a $1,130.8 billion increase in the value of U.S.-owned assets abroad excluding financial derivatives that was partly offset by an $804.7 billion decrease in the value of financial derivatives.

U.S.-owned assets abroad excluding financial derivatives were $19,148.7 billion at the end of 2013 compared with $18,017.9 billion at the end of 2012. The $1,130.8 billion increase reflected a $577.8 billion increase resulting from valuation changes and a $553.0 billion increase resulting from financial outflows. Valuation changes were mainly attributable to the increase in foreign stock prices that raised the value of U.S. holdings of foreign stocks.

Foreign-owned assets in the United States were $26,541.3 billion at the end of 2013 compared with $25,501.5 billion at the end of 2012. The $1,039.8 billion increase reflected a $1,859.8 billion increase in the value of foreign-owned assets in the United States excluding financial derivatives that was partly offset by an $820.1 billion decrease in the value of financial derivatives.

Foreign-owned assets in the United States excluding financial derivatives were $23,799.4 billion at the end of 2013 compared with $21,939.5 billion at the end of 2012. The $1,859.8 billion increase reflected a $953.8 billion increase resulting from valuation changes and a $906.1 billion increase resulting from financial inflows. Valuation changes were mostly attributable to increases in U.S. stock prices that raised the value of foreign holdings of U.S. stocks. The rise in the value of U.S. stocks was partly offset by declines in the value of U.S. debt securities due to falling bond prices.

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Valuing the Components of the U.S. International Investment Position

Investment positions for long-term portfolio securities are based on market values from monthly, annual, and benchmark surveys conducted by the Treasury International Capital (TIC) reporting system of the U.S. Department of the Treasury. Investment positions for financial derivatives are based on fair market values from quarterly surveys conducted by the TIC reporting system. Investment positions for claims and liabilities reported by banks, securities brokers, and other nonbanks are based on contractual (face) values of instruments as reported by financial institutions for both their own accounts and the accounts of their customers on the monthly and quarterly surveys conducted by the TIC reporting system with supplementary data for U.S. nonbanks from foreign central banks.

Investment positions for direct investment are valued at current-period prices based on a revaluation of book values. Book values are reported by U.S. multinational companies on surveys conducted by BEA. Direct investment at current cost is BEA’s featured measure of direct investment at current-period prices.³ The current-cost method values the U.S. and foreign parent shares of their affiliates’ investment in (1) plant and equipment using the current cost of capital equipment, (2) land using general price indexes, and (3) inventories using estimates of their replacement cost.⁴

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Release dates in 2014

BEA’s national, international, regional, and industry statistics; the Survey of Current Business; and BEA news releases are available without charge at www.bea.gov. At the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

NOTE: This news release is available on BEA’s Web site along with Quarterly Highlights and Annual Highlights related to this release, the latest detailed statistics for the U.S. international investment position, and a description of the estimation methods used to compile them. The fourth-quarter statistics for 2013 in this release are preliminary and will be revised on June 30, 2014.

¹ Board of Governors of the Federal Reserve System (FRS), “Table L.5 Total Liabilities and Its Relation to Total Financial Assets,” in Financial Accounts of the United States, Fourth Quarter 2013, Z.1. Statistical Release (Washington, DC: FRS, March 6, 2014): 11. According to the March 6, 2014 Z.1 release, the value of all U.S. financial assets was $193,911.9 billion at the end of the fourth quarter. U.S. assets abroad from the international investment position were $21,963.8 billion at the end of the fourth quarter, 11.3% of all U.S. assets, down from 11.4% in the third quarter and down from the 13.5% series peak in the third quarter of 2011.

² For statistics on financial flows, see the financial account transactions in table 1 of the U.S. International Transactions Accounts. Financial flows discussed in this release are not seasonally adjusted. Detailed valuation changes such as price, exchange-rate, and other changes are available only for annual statistics in the June release.

³ BEA publishes direct investment at market value as an alternative current-period price measure with owners’ equity revalued using indexes of stock market prices. Beginning with the June 30, 2014 release, direct investment at market value will be the featured measure in the U.S net international investment position statistics. BEA also publishes direct investment at historical cost with owners’ equity at the book value reported on BEA’s surveys. Country and industry detail for direct investment are available only on a historical-cost basis (see https://apps.bea.gov/iTable/index_MNC.cfm).

⁴ For additional information on the current-cost and market-value methods, see J. Steven Landefeld and Ann M. Lawson, “Valuation of the U.S. Net International Investment Position,” Survey of Current Business 71 (May 1991): 40–49.