News Release: U.S. International Transactions

NOTE: See the navigation bar at the right side of the news release text for links to data tables, contact personnel and their telephone numbers, and supplementary materials.

EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, Thursday, September 15, 2016
BEA 16—48


Christopher P. Steiner: (301) 278-9492 (Technical) Christopher.Steiner@bea.gov
Jeannine Aversa: (301) 278-9003 (Media) Jeannine.Aversa@bea.gov
U.S. International Transactions: Second Quarter 2016


                                    Current Account Balance

The U.S. current-account deficit decreased to $119.9 billion (preliminary) in the second
quarter of 2016 from $131.8 billion (revised) in the first quarter of 2016, according to
statistics released by the Bureau of Economic Analysis (BEA). The deficit decreased to 2.6
percent of current-dollar gross domestic product (GDP) from 2.9 percent in the first quarter.

The $12.0 billion decrease in the deficit reflected an $8.9 billion increase in the surplus on
primary income to $42.9 billion, a $3.1 billion decrease in the deficit on secondary income to
$37.6 billion, and a $0.4 billion increase in the surplus on services to $61.5 billion.  These
changes were partly offset by a $0.5 billion increase in the deficit on goods to $186.7 billion.

                           Current Account Transactions (tables 1-5)

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $18.0 billion in the second quarter
to $777.0 billion.

   * Primary income receipts increased $10.4 billion to $198.9 billion, primarily reflecting an
     increase in direct investment income.

   * Goods exports increased $6.1 billion to $360.2 billion, reflecting increases in industrial
     supplies and materials, primarily in petroleum and products, and foods, feeds, and
     beverages.  A decrease in consumer goods except food and automotive partly offset these
     increases.

Imports of goods and services and income payments

Imports of goods and services and income payments increased $6.1 billion to $896.9 billion.

   * Goods imports increased $6.5 billion to $546.9 billion, reflecting increases in imports of
     industrial supplies and materials, largely in energy products, and capital goods except
     automotive. These increases were partly offset by a decrease in imports of consumer goods,
     except food and automotive, particularly other household goods, including cell phones.

   * Primary income payments increased $1.4 billion to $155.9 billion, reflecting an increase
     in direct investment income.

   * Secondary income payments decreased $2.4 billion to $69.8 billion, reflecting a decrease
     in U.S. government transfers, both in U.S. government grants and in U.S. government
     pensions and other transfers.

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

Net U.S. borrowing measured by financial-account transactions was $31.1 billion in the second
quarter, a $14.3 billion decrease from net borrowing of $45.4 billion in the first quarter. An
increase in net U.S. acquisition of financial assets excluding financial derivatives was mostly
offset by an increase in net U.S. incurrence of liabilities excluding financial derivatives.
Net transactions in financial derivatives other than reserves reflected more net lending in the
second quarter than in the first quarter.

Financial assets

Net U.S. acquisition of financial assets excluding financial derivatives increased $233.8
billion to $293.7 billion.

   * Transactions in portfolio investment assets increased $167.3 billion to net U.S.
     acquisition of $109.9 billion, as a shift to net acquisition of equity and investment fund
     shares more than offset a shift to net sales of debt securities.

   * Net U.S. acquisition of direct investment assets increased $38.7 billion to $106.1 billion,
     largely reflecting an increase in net acquisition of equity.

   * Net U.S acquisition of other investment assets increased $26.5 billion to $77.5 billion,
     as a shift to net provision of loans to foreigners exceeded a shift to net withdrawal of
     U.S. residents deposits abroad (in currency and deposits).

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives increased $232.2 billion to
$350.4 billion.

   * Net U.S. incurrence of other investment liabilities increased $143.9 billion to $192.0
     billion, mostly reflecting a shift to net incurrence of deposit liabilities in currency
     and deposits.

   * Net U.S. incurrence of direct investment liabilities increased $68.3 billion to $159.6
     billion, reflecting increases in net incurrence of both equity and debt instrument
     liabilities.

Financial derivatives

Transactions in financial derivatives other than reserves reflected second-quarter net lending
of $25.6 billion, a $12.6 billion increase from the first quarter.

                               Statistical Discrepancy (table 1)

The statistical discrepancy increased $2.3 billion in the second quarter to $88.8 billion.

                                    *          *          *

                                           Revisions

        Revisions to First-Quarter 2016 International Transactions Accounts Aggregates
                          [Billions of dollars, seasonally adjusted]

                                                                      Estimate
                                                       Preliminary                Revised
   Current-account balance                                  -124.7                 -131.8
      Goods balance                                         -186.4                 -186.3
      Services balance                                        64.6                   61.1
      Primary-income balance                                  37.5                   34.0
      Secondary-income balance                               -40.3                  -40.6
   Net lending from financial-account transactions           -35.0                  -45.4
   Statistical discrepancy                                    89.6                   86.5

                                    *          *          *

                      Next release: December 15, 2016 at 8:30 A.M. EST
                     U.S. International Transactions, Third Quarter 2016

                                    *          *          *

______________________________________________________________________________________________

         Updated Statistics on U.S. International Services and New Geographic Detail

BEA will release its most detailed annual statistics on trade in services in October. This year's
release will include expanded geographic detail and statistics on information and communications
technology (ICT) and potentially ICT-enabled services.

For more information, see Updated Statistics on U.S. International Services and New Geographic Detail
(www.bea.gov/international/international_services_statistics_2016.htm).

______________________________________________________________________________________________

                                    Additional Information


Resources

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   * Historical time series for these estimates can be accessed in BEAs 
   Interactive Data Application.

   * Access BEA data by registering for BEAs Data Application Programming Interface (API).

   * For more on BEAs statistics, see our monthly online journal, the 
   Survey of Current Business.

   * BEA's news release schedule.

   * More information on these International Transactions statistics will be provided next
     month in the Survey of Current Business.

   * More information on the International Transactions Accounts and a description of the
     estimation methods used to compile them is provided in 
     U.S. International Economic Accounts: Concepts and Methods.


Definitions

The current account consists of transactions between U.S. residents and nonresidents in goods,
services, primary income, and secondary income.

Goods are physical items with ownership rights that can be exchanged among institutional units
through transactions.

Services transactions consist of transactions arising from productive activities that change
the condition of the consumer or that facilitate the exchange of products and financial assets.

Primary income transactions include investment income and compensation of employees. Investment
income is the return on holdings of financial assets and includes direct investment income,
portfolio investment income, other investment income, and income on reserve assets.
Compensation of employees is income for the contribution of labor inputs to the production
process.

Secondary income consists of current transfers between residents and nonresidents. Unlike an
exchange, a transfer is a transaction in which a good, service, or asset is provided without a
corresponding return of economic value. Secondary income receipts and payments include U.S.
government and private transfers, such as U.S. government grants and pensions, fines and
penalties, withholding taxes, personal transfers (remittances), insurance-related transfers,
and other current transfers.

The capital account consists of capital transfers between residents and nonresidents and the
cross-border acquisition and disposal of nonproduced non-financial assets. Capital transfers
include debt forgiveness and certain disaster-related nonlife insurance claims. Nonproduced
nonfinancial assets include natural resources and contracts, leases, and licenses. Capital
account transactions are distinguished from current account transactions in that capital
account transactions result in a change in the assets of one or both parties to the transaction
without affecting the income or savings of either party.

The financial account consists of transactions between U.S. residents and nonresidents for
direct investment, portfolio investment, other investment, reserves, and financial derivatives
other than reserves.

Direct investment is a category of cross-border investment associated with a resident in one
economy having control or a significant degree of influence on the management of an enterprise
resident in another economy. Ownership or control of 10 percent or more of the nonresident
entitys voting securities is the threshold for separating direct investment from other types
of investment. Direct investment transactions include transactions in equity (including
reinvestment of earnings) and debt instruments.

Portfolio investment transactions consist of cross-border transactions involving equity and
investment fund shares and debt securities, excluding those included in direct investment or
reserve assets.

Other investment is a residual category that includes cross-border financial instruments other
than those included in direct investment, portfolio investment, financial derivatives, and
reserve assets. Other investment transactions consist of transactions in currency and deposits,
loans, insurance technical reserves, trade credit and advances, and, for liabilities, special
drawing rights allocations.

Reserve assets are those external assets that are readily available to and controlled by
monetary authorities for meeting balance of payments financing needs, for intervention in
exchange markets to affect the currency exchange rate, and for other related purposes such as
maintaining confidence in the currency and the economy and serving as a basis for foreign
borrowing. The major published components are monetary gold, International Monetary Fund (IMF)
special drawing rights (SDRs), reserve position in the IMF, and other reserve assets.

Financial derivatives other than reserves consist of financial contracts that are linked to
underlying financial instruments, commodities, or indicators. Transactions in financial
derivatives consist of U.S. cash receipts and payments arising from the sale, purchase,
periodic settlement, or final settlement of financial derivatives contracts. Transactions in
financial derivatives are only available as a net value equal to transactions for assets less
transactions for liabilities. A positive value represents net cash payments by U.S. residents
to foreign residents from settlements of derivatives contracts (net lending) and a negative
value represents net U.S. cash receipts (net borrowing).

The statistical discrepancy is the difference between net acquisition of assets and net
incurrence of liabilities in the financial account (including financial derivatives) less the
difference between total credits and total debits recorded in the current and capital accounts.
The statistical discrepancy can also be calculated as the difference between net lending
(borrowing) measured from financial-account transactions and net lending (borrowing) measured
from current- and capital-account transactions.

The current-account balance is the difference between credits (exports and income receipts) and
debits (imports and income payments) in the current account. The balance is a net measure of
current-account transactions between the United States and the rest of the world. A positive
balance indicates a current-account surplus. A negative balance indicates a current-account
deficit.

Net lending (borrowing) measures the balance of funds supplied to the rest of the world. Net
lending means that, in net terms, the U.S. economy supplies funds to the rest of the world. Net
borrowing means the opposite. Net lending (borrowing) can be measured by current- and capital
account transactions or by financial-account transactions. Conceptually, the two measures are
equal. In practice, the two measures differ by the statistical discrepancy.


Release and revision cycle

Preliminary quarterly International Transactions Accounts (ITA) statistics are released in
March, June, September, and December approximately 75 days after the end of the reference
quarter. These statistics are revised the following quarter to incorporate new source data.
Quarterly statistics are open for revision for at least the prior three years in annual
revisions released in June. Preliminary annual statistics are released in March along with
statistics for the fourth quarter of the previous year. These annual statistics are open for
revision for at least the three prior years in subsequent annual revisions.


Related statistics

The ITAs comprise one part of a broader set of U.S. international economic accounts that, taken
together, provide a comprehensive, integrated, and detailed picture of U.S. international
economic activities.

The International Investment Position (IIP) Accounts are released quarterly. 
Financial transactions that are reported in the ITAs are one type of change in position
recorded in the IIP Accounts.

Statistics on direct investment and multinational enterprises (MNEs)
include annual statistics on the activities of MNEs,
detailed annual and quarterly statistics on direct investment, and annual statistics on new
investment in the United States.

Statistics on International Services that include detailed annual information on trade in services and on services 
supplied through the channel of direct investment by affiliates of MNEs are released annually.

U.S. International Trade in Goods and Services, released by BEA and the U.S. Census Bureau, 
provides monthly statistics on trade in goods and services.

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List of News Release Tables

Table 1. U.S. International Transactions
Table 2. U.S. International Trade in Goods
Table 3. U.S. International Trade in Services
Table 4. U.S. International Transactions in Primary Income
Table 5. U.S. International Transactions in Secondary Income
Table 6. U.S. International Financial Transactions for Direct Investment
Table 7. U.S. International Financial Transactions for Portfolio Investment
Table 8. U.S. International Financial Transactions for Other Investment