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News Release: U.S. International Investment Position at Yearend, 2003


The tables in this release are available in an XLS spreadsheet and the entire release is available in PDF format.
Many of the tables in our news releases are very wide.

FOR WIRE TRANSMISSION: 8:30 A.M. EDT, WEDNESDAY, June 30, 2004
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