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News Release

EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, Tuesday, December 19, 2017
BEA 17-67

U.S. International Transactions, 3rd quarter 2017

                                    Current-Account Balance

The U.S. current-account deficit decreased to $100.6 billion (preliminary) in the third quarter
of 2017 from $124.4 billion (revised) in the second quarter of 2017, according to statistics
released by the Bureau of Economic Analysis (BEA). The deficit decreased to 2.1 percent of current-
dollar gross domestic product (GDP) from 2.6 percent in the second quarter.

The $23.8 billion decrease in the current-account deficit reflected decreases in the deficits on
secondary income and goods and increases in the surpluses on primary income and services.

BOX.___________________________________________________________________________________________
                             Third Quarter 2017 Atlantic Hurricanes

During the third quarter, major hurricanes caused severe damage and flooding in several states
along the Gulf Coast and in Puerto Rico and the U.S. Virgin Islands. See the section
“Impact of Hurricanes on Third Quarter 2017 Estimates” for more information.
_______________________________________________________________________________________________

The remainder of this release highlights changes from the second quarter to the third quarter in
major aggregates of the U.S. international transactions accounts, selected component contributions
to those changes, and updates to previously published statistics for the second quarter.

                            Current-Account Transactions (tables 1-5)

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $23.4 billion in the third quarter
to $858.7 billion.

   * Primary income receipts increased $9.4 billion to $234.5 billion, mostly reflecting increases
     in portfolio investment income and in direct investment income.

   * Secondary income receipts increased $6.9 billion to $41.1 billion, mostly reflecting an
     increase in U.S. government transfers, primarily fines and penalties.

   * Goods exports increased $5.2 billion to $388.1 billion, mostly reflecting an increase in
     capital goods except automotive, primarily civilian aircraft, engines, and parts and
     telecommunications equipment.

Imports of goods and services and income payments

Imports of goods and services and income payments decreased $0.4 billion to $959.2 billion.

   * Secondary income payments decreased $3.0 billion to $64.3 billion, mostly reflecting a
     decrease in private transfers, primarily fines and penalties.

   * Primary income payments increased $2.8 billion to $177.5 billion, reflecting increases in
     portfolio investment income and in other investment income.

                                    Capital Account (table 1)

Capital transfer receipts were $24.9 billion in the third quarter. The transactions reflected
receipts from foreign insurance companies for losses resulting from hurricanes Harvey, Irma, and
Maria.

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

Net U.S. borrowing measured by financial-account transactions was $105.6 billion in the third
quarter of 2017, a decrease from net borrowing of $114.4 billion in the second quarter.

Financial assets

Net U.S. acquisition of financial assets excluding financial derivatives decreased $7.0 billion
in the third quarter to $337.9 billion.

   * Net U.S. acquisition of direct investment assets decreased $13.9 billion to $76.7 billion,
     reflecting a decrease in net acquisition of equity assets.

   * Net U.S. acquisition of portfolio investment assets decreased $10.9 billion to $175.6
     billion, reflecting a decrease in net U.S. purchases of equity and investment fund shares.

   * Net U.S. acquisition of other investment assets increased $18.0 billion to $85.6 billion,
     partly offsetting the decreases in net acquisition of direct investment assets and in net
     acquisition of portfolio investment assets. The increase in net acquisition of other
     investment assets reflected an increase in net acquisition of currency and deposits.

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives decreased $6.5 billion to
$462.1 billion.

   * Net U.S. incurrence of portfolio investment liabilities decreased $7.2 billion to $284.0
     billion, reflecting a decrease in net foreign purchases of U.S. debt securities.

   * Net U.S. incurrence of other investment liabilities decreased $4.0 billion to $82.3 billion,
     reflecting largely offsetting changes in transactions in deposit and loan liabilities. In
     deposits, transactions shifted to net foreign withdrawal of deposits in the United States
     in the third quarter from net foreign placement in the second quarter. In loans, transactions
     shifted to net U.S. incurrence from net U.S. repayment.

   * Net U.S. incurrence of direct investment liabilities increased $4.7 billion to $95.8 billion,
     partly offsetting the decreases in net incurrence of portfolio investment liabilities and
     in net incurrence of other investment liabilities. The increase in net incurrence of direct
     investment liabilities reflected an increase in net incurrence of equity liabilities.

Financial derivatives

Transactions in financial derivatives other than reserves reflected third-quarter net lending of
$18.6 billion, an increase of $9.3 billion from the second quarter.

                               Statistical Discrepancy (table 1)

The statistical discrepancy was -$29.9 billion in the third quarter, after a
statistical discrepancy of $10.0 billion in the second quarter.

         Updates to Second Quarter 2017 International Transactions Accounts Aggregates
                           Billions of dollars, seasonally adjusted

                                                      Preliminary estimate    Revised estimate
Current-account balance                                       -123.1               -124.4
Goods balance                                                 -201.4               -201.4
   Services balance                                             64.1                 59.7
   Primary-income balance                                       47.2                 50.5
   Secondary-income balance                                    -33.0                -33.2
Net lending (+)/borrowing (-) from
   financial-account transactions                             -112.5               -114.4
Statistical discrepancy                                         10.6                 10.0


                        Next release:  March 21, 2018 at 8:30 A.M. EDT
                 U.S. International Transactions, Fourth Quarter and Year 2017

                                       *       *       *

                    U.S. International Transactions Release Dates in 2018

                    Fourth Quarter and Year 2017                 March 21
                    First Quarter 2018 and Annual Update          June 20
                    Second Quarter 2018                      September 19
                    Third Quarter 2018                        December 19


                     Impact of Hurricanes on Third Quarter 2017 Estimates

During the third quarter, two major hurricanes caused severe damage and flooding in several states
along the Gulf Coast. Hurricane Harvey made its initial landfall on August 25 in Texas, and made
a second landfall in Louisiana on August 30 as a tropical storm. On September 10, Hurricane Irma
hit the lower Florida Keys and the southern mainland of Florida. A third hurricane, Maria, made
its initial landfall on the U.S. Virgin Islands and Puerto Rico on September 20, causing catastrophic
damage to these island areas.

In the U.S. international transactions accounts, Puerto Rico and other U.S. territories and
possessions are included as part of the domestic economy. Note that this differs from the geographic
coverage of the United States in the national income and product accounts. For more information,
see the FAQ “Are Puerto Rico and the U.S. Territories included in the estimates of U.S. GDP?"

The effects of disasters—such as hurricanes, terrorist attacks, and other major catastrophes—on
the international economic accounts are embedded in the source data that BEA uses to produce the
statistics. Source data providers generally cannot isolate those effects, and thus, BEA cannot
separately quantify the impacts of the disasters. Nevertheless, there are several possible impacts
of the disasters on the international accounts as discussed below.

Goods

Trade in goods may be impacted if the disaster results in port closures, which could affect the
flow of traded goods. During port closures, shipments of goods may be diverted, amended, or canceled.
Diverted import shipments may enter through another U.S. port or be transshipped through Mexico
or Canada. Disasters such as hurricanes and earthquakes may cause power outages or inaccessibility
to facilities, resulting in disruptions to the production of traded goods. For example, a hurricane
occurring in the United States may cause a temporary loss of petroleum production and refining
activity in the affected area, thus impacting exports of petroleum and products.

The primary source for statistics on trade in goods is U.S. Census Bureau tabulations of data
collected by U.S. Customs and Border Protection. For more information on the collection of these
statistics and possible scenarios for shipments directly impacted by the hurricanes, along with
information regarding procedures used to produce the statistics, see the notice in U.S.
International Trade in Goods and Services: October 2017.

Services

Trade in services may be impacted if service activities are interrupted by the disaster. For
example, transport services may be affected by port closures and by diverted shipments of goods.
Port closures and other disruptions to service activities may also affect travel. Similarly, if
business operations are disrupted, trade in certain business services could be impacted.

The impact of the disaster on insurance services is likely to be small because BEA uses normal
rather than actual losses to measure insurance services. For more information, see the FAQ “How are
property and casualty insurance services measured in GDP?”

Primary Income and Financial Flows

Direct investment primary income and financial flows between parents and their affiliates may
reflect the effects of the disaster on the earnings of companies located in the affected area. 
For example, affiliates affected by a hurricane may halt production temporarily, require repairs
to facilities, or face difficulties in acquiring inputs and shipping products, all of which could
affect their earnings. Any additional funding provided by parent companies to their affiliates
in the wake of a disaster would be reflected in financial flows.

Secondary Income

Disasters may affect secondary income, which includes U.S. government and private transfers, such
as U.S. government grants, personal transfers (remittances), charitable donations, and insurance
-related transfers. For example, in the case of a hurricane or an earthquake occurring in the
United States, any donations for disaster relief and remittances from nonresidents to families
and friends in the affected area would be reflected in secondary income receipts.

Capital Account

Insurance claims are typically treated as current transfers in secondary income. However, if BEA
classifies a domestic event as a disaster, then the losses recovered from foreign insurance companies
following the event are recorded as transfer receipts in the capital account for the affected
quarter. This is the case if the associated property losses or the insurance payouts exceed 0.1
percent of GDP. For more information, see the FAQ “How do losses recovered from foreign insurance
companies following natural or man-made disasters affect foreign transactions, the current account
balance, and net lending or net borrowing?"