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EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, Tuesday, December 19, 2017
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?"