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. EST, Thursday, December 15, 2016
BEA 16—69


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: Third Quarter 2016


                                    Current Account Balance

The U.S. current account deficit decreased to $113.0 billion (preliminary) in the third quarter
of 2016 from $118.3 billion (revised) in the second quarter of 2016, according to statistics
released by the Bureau of Economic Analysis (BEA).  The deficit decreased to 2.4 percent of
current-dollar gross domestic product (GDP) from 2.6 percent in the second quarter.

The $5.3 billion decrease in the current account deficit reflected a $9.0 billion decrease in the
deficit on goods that was partly offset by changes in the balances on secondary income, primary
income, and services.

                              Current Account Transactions (tables 1-5)

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $17.7 billion in the third quarter
to $799.0 billion.

   * Goods exports increased $15.7 billion to $375.9 billion, mostly reflecting increases in foods,
     feeds, and beverages, largely soybeans.  Exports of industrial supplies and materials,
     nonmonetary gold, and consumer goods except food and automotive (particularly in jewelry and
     collectibles) also increased.

   * Services exports increased $2.0 billion to $188.2 billion, mostly reflecting an increase in
     travel (for all purposes including education) that was partly offset by a decrease in transport.

Imports of goods and services and income payments

Imports of goods and services and income payments increased $12.4 billion to $912.0 billion.

   * Goods imports increased $6.7 billion to $553.6 billion, mostly reflecting an increase in
     imports of industrial supplies and materials, primarily petroleum and products, nonferrous
     metals, and iron and steel products.

   * Services imports increased $2.7 billion to $126.9 billion, mostly reflecting increases in
     charges for the use of intellectual property and travel (for all purposes including education).

   * Secondary income payments increased $2.0 billion to $72.0 billion, mostly reflecting an
     increase in U.S. government transfers, primarily U.S. government grants.

   * Primary income payments increased $1.0 billion to $159.4 billion, mostly reflecting an increase
     in portfolio investment income payments that was partly offset by a decrease in direct investment
     income payments.

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

Net U.S. borrowing measured by financial-account transactions was $207.9 billion in the third
quarter, an increase from net borrowing of $41.0 billion in the second quarter.  A decrease in
net U.S. acquisition of financial assets excluding financial derivatives was partly offset by a
decrease in net U.S. incurrence of liabilities excluding financial derivatives and an increase
in net lending in financial derivatives other than reserves.

Financial assets

Net U.S. acquisition of financial assets excluding financial derivatives decreased $292.0 billion
in the third quarter to $31.5 billion.

   * Transactions in portfolio investment assets shifted to net U.S. sales of $35.1 billion from
     net U.S. acquisition of $146.4 billion, mostly reflecting a shift to net sales of equity and
     investment fund shares from net acquisition in the second quarter.

   * Transactions in other investment assets shifted to net U.S. liquidation of $22.6 billion
     from net U.S. acquisition of $70.6 billion, largely reflecting increased net withdrawal of
     U.S. residents foreign holdings of currency and deposits.

   * Net U.S. acquisition of direct investment assets decreased $18.8 billion to $87.5 billion,
     reflecting decreases in net acquisitions of equity and debt instruments.

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives decreased $115.9 billion to
$251.5 billion.

   * Transactions in other investment liabilities shifted to net U.S. repayment of $64.5 billion
     from net U.S. incurrence of $181.4 billion, largely reflecting a shift in currency and deposits
     and loans to net U.S. repayment from net incurrence in the second quarter.

   * Net U.S. incurrence of direct investment liabilities decreased $87.1 billion to $86.9 billion,
     reflecting decreases in net U.S. incurrence of both equity and debt instrument liabilities.

   * Net U.S. incurrence of portfolio investment liabilities increased $217.2 billion to $229.1
     billion, partly offsetting the decreases in the other two major categories.  The increase
     largely reflected a shift to net foreign purchases of U.S. equity and investment fund shares
     from net foreign sales in the second quarter.

Financial derivatives

Transactions in financial derivatives other than reserves reflected third-quarter net lending of
$12.1 billion, a $9.2 billion increase from the second quarter.

                                Statistical Discrepancy (table 1)

The statistical discrepancy shifted to -$95.0 billion in the third quarter from $77.3 billion in
the second quarter.

                     Updates to International Transactions Accounts Statistics

           Updates to Second-Quarter 2016 International Transactions Accounts Aggregates
                              Billions of dollars, seasonally adjusted

                                                       Preliminary estimate    Revised estimate
Current-account balance                                       -119.9               -118.3
  Goods balance                                               -186.7               -186.7
  Services balance                                              61.5                 62.0
  Primary-income balance                                        42.9                 44.2
  Secondary-income balance                                     -37.6                -37.7
Net lending from financial-account transactions                -31.1                -41.0
Statistical discrepancy                                         88.8                 77.3

                       Next release:  March 21, 2017 at 8:30 A.M. EDT
                U.S. International Transactions, Fourth Quarter and Year 2016

                                    *          *          *

                    U.S. International Transactions Release Dates in 2017

                    Fourth Quarter and Year 2016                 March 21
                    First Quarter 2017 and Annual Update          June 20
                    Second Quarter 2017                      September 19
                    Third Quarter 2017                        December 19

                                    Additional Information

Resources

   * Stay informed about BEA developments by reading the BEA blog, signing up for
     BEAs email subscription service, or following BEA on Twitter @BEA_News.

   * 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 80 days after the end of the reference quarter. These
statistics are updated 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.

______________________________________________________________________________________________

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