FOR WIRE TRANSMISSION: 10:00 A.M. EDT, TUESDAY, DECEMBER 14, 1999 Harlan W. King: (202) 606-9571 BEA 99-35 Recorded Message: 606-5362 U.S. International Transactions: Third Quarter 1999 Current Account The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--increased to $89.9 billion in the third quarter from $80.9 billion (revised) in the second, according to preliminary estimates of the Commerce Department's Bureau of Economic Analysis. The increase was nearly all accounted for by an increase in the deficit on goods and services; there was a small increase in the deficit on income. Goods and services The deficit on goods and services increased to $73.8 billion in the third quarter from $65.1 billion in the second. Goods The deficit on goods increased to $92.1 billion in the third quarter from $84.4 billion in the second. Goods exports increased to $173.6 billion from $165.9 billion. The increase was mostly accounted for by increases in capital goods, including civilian aircraft, engines,and parts, and in nonagricultural industrial supplies and materials. Goods imports increased to $265.7 billion from $250.3 billion. About three-fourths of the increase was accounted for by widespread increases in nonpetroleum products. The increase in petroleum products was more than accounted for by a continued rise in petroleum prices. Services The surplus on services decreased to $18.3 billion in the third quarter from $19.3 billion in the second. Service receipts increased to $69.0 billion from $68.7 billion. The increase was more than accounted for by increases in "other" transportation, in "other" private services, and in transfers under U.S. military sales contracts. Service payments increased to $50.7 billion from $49.3 billion. The increase was more than accounted for by increases in "other" transportation, in "other" private services, in direct defense expenditures, and in travel. Income The deficit on income increased to $4.9 billion in the third quarter from $4.6 billion in the second. Investment income Income receipts on U.S.-owned assets abroad increased to $69.1 billion from $66.4 billion. The increase was accounted for by increases in direct investment receipts and in "other" private receipts. Income payments on foreign-owned assets in the United States increased to $72.6 billion from $69.6 billion. The increase was more than accounted for by increases in "other" private payments and in U.S. Government payments, while direct investment payments decreased slightly. Compensation of employees Receipts for compensation of U.S. workers abroad were unchanged at $0.5 billion. Payments for compensation of foreign workers in the United States were unchanged at $1.9 billion. Unilateral current transfers Net unilateral current transfers were unchanged at $11.2 billion. Increases in private remittances and other transfers were offset by decreases in U.S. Government grants. Capital and Financial Account Capital Account Net capital account transactions were unchanged at $0.2 billion. Financial Account Net recorded financial inflows--the difference between changes in U.S.-owned assets abroad and changes in foreign-owned assets in the United States--were $105.7 billion in the third quarter, down from $119.6 billion (revised) in the second. U.S.-owned assets abroad U.S.-owned assets abroad increased $101.5 billion in the third quarter, following an increase of $154.7 billion in the second. U.S. claims on foreigners reported by U.S. banks decreased $0.4 billion in the third quarter, in contrast to an increase of $42.5 billion in the second. The shift was mostly accounted for by sharply reduced credit demand from Western Europe. Net U.S. purchases of foreign securities decreased to $26.5 billion in third quarter from $64.6 billion in the second. Net U.S. purchases of foreign stocks declined to $19.2 billion from $67.7 billion, mostly as a result of sharply lower exchanges of stock related to acquisitions of U.S. companies by foreign companies. Transactions in foreign bonds shifted to net U.S. purchases of $7.3 billion from net U.S. sales of $3.1 billion. Net financial outflows for U.S. direct investment abroad were $44.5 billion in the third quarter, up from $31.6 billion in the second. Net equity capital outflows increased sharply, reinvested earnings increased, and net intercompany debt shifted to small inflows. U.S. official reserve assets decreased $2.0 billion in the third quarter, following a decrease of $1.2 billion in the second. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $207.2 billion in the third quarter, following an increase of $274.3 billion in the second. Net financial inflows for foreign direct investment in the United States were $44.5 billion in the third quarter, down sharply from $154.4 billion in the second. Net equity inflows fell as a result of sharply lower acquisitions of U.S. companies by foreign companies. Reinvested earnings and net intercompany debt inflows both increased. Net foreign purchases of U.S. securities other than U.S. Treasury securities increased to a second consecutive record of $93.1 billion in the third quarter, following the previous record for net purchases of $79.1 billion in the second. Net foreign purchases of U.S. stocks slowed to $24.1 billion from $29.0 billion, while net foreign purchases of U.S. corporate and other bonds surged to $69.0 billion from $50.1 billion. U.S. liabilities to foreigners reported by U.S. banks, excluding U.S. Treasury securities, increased $31.0 billion in the third quarter, down from $34.9 billion in the second. Some of the third-quarter increase was prompted by more favorable short-term yields in the United States than overseas, leading to increased placement of funds in U.S. banks by private foreigners. Net foreign transactions in U.S. Treasury securities shifted to net foreign purchases of $9.7 billion in the third quarter, from net foreign sales of $5.4 billion in the second. The shift was partly attributable to sharply higher yields on U.S. Treasury bonds. Net U.S. currency shipments were $4.7 billion in the third quarter, up from $3.1 billion in the second. Foreign official assets in the United States increased $12.1 billion in the third quarter, in contrast to a decrease of $0.6 billion in the second. The increase was mostly accounted for by an increase in assets of several industrial and non-OPEC developing countries. The statistical discrepancy--errors and omissions in recorded transactions--was a negative $15.9 billion in the third quarter, compared with a negative $38.8 billion in the second. In the third quarter, the U.S. dollar depreciated 1 percent on a trade-weighted quarterly average basis against a group of 7 major currencies. Revisions The second-quarter international transactions are revised from previously published estimates. The current-account deficit for the second quarter was revised to $80.9 billion from $80.7 billion. The goods deficit was revised to $84.4 billion from $84.6 billion; the services surplus was revised to $19.3 billion from $19.6 billion; the deficit on income was revised to $4.6 billion from $4.4 billion; and net unilateral current transfers were virtually unchanged from the previous estimate at $11.2 billion. Net recorded financial inflows were revised to $119.6 billion from $116.9 billion. * * * Release dates for 2000: Fourth quarter and year 1999............................................March 15, 2000 (Wednesday) First quarter 2000......................................................................June 20, 2000 (Tuesday) Second quarter 2000...................................................September 13, 2000 (Wednesday) Third quarter 2000..........................................................December 14, 2000 (Thursday) * * * 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.doc.gov STAT-USA maintains an Internet site that contains BEA estimates, BEA news releases, and the Survey of Current Business. The information available through STAT-USA is often more detailed and more timely than that available from other sources. To subscribe to STAT- USA's World Wide Web system, go to www.stat-usa.gov. Subscriptions for single-user unlimited access to STAT-USA's Internet information are $50.00 for 3 months or $150.00 for 1 year. For further information, call (202) 482-1986. Summary BEA estimates are available on recorded messages at the time of public release at the following telephone numbers: (202) 606-5362 U.S. international transactions -5306 Gross domestic product -5303 Personal income and outlays Most of BEA's estimates and analyses appear in the Survey of Current Business, BEA's monthly journal. The printed Survey of Current Business is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. First class mail: Annual subscription $120.00 domestic. Second class mail: Annual subscription $48.00 domestic, $60.00 foreign; single issue $17.25 domestic, $21.56 foreign. December 14, 1999 Table 1.--U.S. International Transactions [Millions of dollars, quarters seasonally adjusted] 1998 1999 Change: (Credits +, debits -) 1998 1999 I II III IV I IIr IIIp II-III Current account 1 Exports of goods and services and income receipts......................................... 1,192,231 302,289 298,463 291,493 299,985 295,932 301,369 312,189 10,820 2 Exports of goods and services........................................................ 933,907 235,831 231,889 229,284 236,904 231,904 234,512 242,626 8,114 3 Goods, balance of payments basis 1/.............................................. 670,246 170,665 165,198 164,259 170,124 164,292 165,862 173,578 7,716 4 Services 2/...................................................................... 263,661 65,166 66,691 65,025 66,780 67,612 68,650 69,048 398 5 Transfers under U.S. military agency sales contracts......................... 17,155 4,606 4,489 3,979 4,081 4,340 4,099 4,257 158 6 Travel....................................................................... 71,250 17,903 18,260 17,149 17,938 18,138 18,437 18,322 -115 7 Passenger fares.............................................................. 19,996 4,916 5,185 5,052 4,843 4,995 5,240 5,332 92 8 Other transportation......................................................... 25,518 6,338 6,268 6,339 6,575 6,501 6,731 6,921 190 9 Royalties and license fees.................................................. 36,808 8,882 9,002 9,029 9,894 9,337 9,365 9,317 -48 10 Other private services...................................................... 92,116 22,302 23,296 23,278 23,240 24,095 24,531 24,696 165 11 U.S. Government miscellaneous services...................................... 818 219 191 199 209 206 247 203 -44 12 Income receipts...................................................................... 258,324 66,458 66,574 62,209 63,081 64,028 66,857 69,563 2,706 13 Income receipts on U.S.-owned assets abroad..................................... 256,467 65,994 66,111 61,744 62,617 63,558 66,386 69,093 2,707 14 Direct investment receipts.................................................. 102,846 27,338 26,744 23,124 25,639 26,910 28,486 29,916 1,430 15 Other private receipts...................................................... 150,001 37,826 38,412 37,744 36,019 35,760 37,072 38,426 1,354 16 U.S. Government receipts.................................................... 3,620 830 955 876 959 888 828 751 -77 17 Compensation of employees....................................................... 1,857 464 463 465 464 470 471 470 -1 18 Imports of goods and services and income payments......................................... -1,368,718 -335,380 -340,977 -344,182 -348,180 -354,246 -371,066 -390,934 -19,868 19 Imports of goods and services........................................................ -1,098,189 -269,169 -273,850 -275,008 -280,166 -285,878 -299,597 -316,451 -16,854 20 Goods, balance of payments basis 1/.............................................. -917,178 -225,541 -228,698 -229,228 -233,711 -238,495 -250,274 -265,723 -15,449 21 Services 2/...................................................................... -181,011 -43,628 -45,152 -45,780 -46,455 -47,383 -49,323 -50,728 -1,405 22 Direct defense expenditures.................................................. -12,841 -3,098 -3,061 -3,276 -3,406 -3,503 -3,593 -3,850 -257 23 Travel....................................................................... -56,105 -13,736 -14,168 -14,070 -14,131 -14,847 -14,960 -15,191 -231 24 Passenger fares.............................................................. -19,797 -4,629 -4,958 -5,085 -5,125 -5,114 -5,316 -5,456 -140 25 Other transportation......................................................... -30,457 -7,321 -7,590 -7,700 -7,849 -7,726 -8,362 -9,102 -740 26 Royalties and license fees.................................................. -11,292 -2,955 -2,694 -2,721 -2,923 -3,176 -3,197 -2,921 276 27 Other private services...................................................... -47,670 -11,217 -12,014 -12,163 -12,276 -12,335 -13,166 -13,452 -286 28 U.S. Government miscellaneous services...................................... -2,849 -672 -667 -765 -745 -682 -729 -756 -27 29 Income payments...................................................................... -270,529 -66,211 -67,127 -69,174 -68,014 -68,368 -71,469 -74,483 -3,014 30 Income payments on foreign-owned assets in the United States.................... -263,423 -64,476 -65,376 -67,381 -66,188 -66,504 -69,611 -72,613 -3,002 31 Direct investment payments.................................................. -43,441 -10,501 -10,567 -11,290 -11,081 -12,076 -14,496 -14,259 237 32 Other private payments...................................................... -128,863 -31,292 -31,849 -33,314 -32,408 -31,759 -31,960 -34,207 -2,247 33 U.S. Government payments.................................................... -91,119 -22,683 -22,960 -22,777 -22,699 -22,669 -23,155 -24,147 -992 34 Compensation of employees....................................................... -7,106 -1,735 -1,751 -1,793 -1,826 -1,864 -1,858 -1,870 -12 35 Unilateral current transfers, net......................................................... -44,075 -9,927 -9,886 -10,787 -13,474 -10,340 -11,212 -11,204 8 36 U.S. Government grants............................................................... -13,057 -2,340 -2,168 -2,807 -5,742 -2,200 -2,760 -2,700 60 37 U.S. Government pensions and other transfers......................................... -4,350 -1,079 -1,095 -1,106 -1,071 -1,104 -1,116 -1,107 9 38 Private remittances and other transfers.............................................. -26,668 -6,508 -6,623 -6,874 -6,661 -7,036 -7,336 -7,397 -61 December 14, 1999 Table 1.--U.S. International Transactions (Continued) [Millions of dollars, quarters seasonally adjusted] 1998 1999 Change: (Credits +, debits -) 1998 1999 I II III IV I IIr IIIp II-III Capital and financial account Capital account 39 Capital account transactions, net......................................................... 617 143 160 148 166 166 178 166 -12 Financial account 40 U.S.-owned assets abroad, net (increase/financial outflow (-))............................ -292,818 -59,599 -120,517 -62,097 -50,607 -15,148 -154,713 -101,483 53,230 41 U.S. official reserve assets, net..................................................... -6,784 -444 -1,945 -2,026 -2,369 4,068 1,159 1,950 791 42 Gold............................................................................. .... .... .... .... .... .... .... .... .... 43 Special drawing rights........................................................... -149 -182 72 188 -227 563 -190 -185 5 44 Reserve position in the International Monetary Fund.............................. -5,118 -85 -1,031 -2,078 -1,924 3 1,413 2,268 855 45 Foreign currencies............................................................... -1,517 -177 -986 -136 -218 3,502 -64 -133 -69 46 U.S. Government assets, other than official reserve assets, net....................... -429 -81 -483 185 -50 119 -392 -673 -281 47 U.S. credits and other long-term assets.......................................... -4,676 -1,192 -1,156 -1,285 -1,043 -1,304 -2,167 -1,591 576 48 Repayments on U.S. credits and other long-term assets............................ 4,102 1,133 699 1,332 938 1,545 1,887 1,020 -867 49 U.S. foreign currency holdings and U.S. short-term assets, net................... 145 -22 -26 138 55 -122 -112 -102 10 50 U.S. private assets, net.............................................................. -285,605 -59,074 -118,089 -60,256 -48,188 -19,335 -155,480 -102,760 52,720 51 Direct investment................................................................ -132,829 -37,300 -43,172 -21,586 -30,773 -41,385 -31,566 -44,535 -12,969 52 Foreign securities............................................................... -102,817 -14,116 -32,886 14,994 -70,809 8,132 -64,579 -26,511 38,068 53 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.................................................... -25,041 -6,596 -14,327 -20,320 16,202 -13,853 -16,816 -32,098 -15,282 54 U.S. claims reported by U.S. banks, not included elsewhere....................... -24,918 -1,062 -27,704 -33,344 37,192 27,771 -42,519 384 42,903 55 Foreign-owned assets in the United States, net (increase/financial inflow (+))............ 502,637 96,817 162,466 93,547 149,805 88,860 274,271 207,153 -67,118 56 Foreign official assets in the United States, net..................................... -21,684 11,004 -10,551 -46,489 24,352 4,708 -628 12,106 12,734 57 U.S. Government securities....................................................... -3,625 13,946 -20,064 -30,905 33,398 6,793 -916 14,812 15,728 58 U.S. Treasury securities..................................................... -9,957 11,336 -20,318 -32,811 31,836 800 -6,708 12,880 19,588 59 Other........................................................................ 6,332 2,610 254 1,906 1,562 5,993 5,792 1,932 -3,860 60 Other U.S. Government liabilities................................................ -3,113 -1,028 -807 -224 -1,054 -1,594 -647 -1,163 -516 61 U.S. liabilities reported by U.S. banks, not included elsewhere.................. -11,469 -958 9,488 -12,866 -7,133 -589 1,437 -1,832 -3,269 62 Other foreign official assets.................................................... -3,477 -956 832 -2,494 -859 98 -502 289 791 63 Other foreign assets in the United States, net........................................ 524,321 85,813 173,017 140,036 125,453 84,152 274,899 195,047 -79,852 64 Direct investment................................................................ 193,375 27,016 20,946 24,906 120,505 22,949 154,373 44,474 -109,899 65 U.S. Treasury securities......................................................... 46,155 -2,557 25,759 -1,438 24,391 -8,781 -5,407 9,713 15,120 66 U.S. securities other than U.S. Treasury securities.............................. 218,026 76,810 71,785 20,103 49,328 61,540 79,067 93,062 13,995 67 U.S. currency.................................................................... 16,622 746 2,349 7,277 6,250 2,440 3,057 4,697 1,640 68 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns................................................... 9,412 32,707 18,040 11,875 -53,210 20,188 8,871 12,136 3,265 69 U.S. liabilities reported by U.S. banks, not included elsewhere.................. 40,731 -48,909 34,138 77,313 -21,811 -14,184 34,938 30,965 -3,973 70 Statistical discrepancy (sum of above items with sign reversed)........................... 10,126 5,657 10,291 31,878 -37,695 -5,224 -38,827 -15,887 22,940 Memoranda: 71 Balance on goods (lines 3 and 20)......................................................... -246,932 -54,876 -63,500 -64,969 -63,587 -74,203 -84,412 -92,145 -7,733 72 Balance on services (lines 4 and 21)...................................................... 82,650 21,538 21,539 19,245 20,325 20,229 19,327 18,320 -1,007 73 Balance on goods and services (lines 2 and 19)............................................ -164,282 -33,338 -41,961 -45,724 -43,262 -53,974 -65,085 -73,825 -8,740 74 Balance on income (lines 12 and 29)....................................................... -12,205 247 -553 -6,965 -4,933 -4,340 -4,612 -4,920 -308 75 Unilateral current transfers, net (line 35)............................................... -44,075 -9,927 -9,886 -10,787 -13,474 -10,340 -11,212 -11,204 8 76 Balance on current account (lines 1, 18, and 35 or lines 73, 74, and 75).................. -220,562 -43,018 -52,400 -63,476 -61,669 -68,654 -80,909 -89,949 -9,040 r Revised. p Preliminary. 1. Adjusted for timing, valuation, and coverage to balance of payments basis; excludes exports under U. S. military agency sales contracts and imports of U. S. military agencies. 2. Includes some goods that cannot be separately identified from services. NOTE:--Details may not add to totals because of rounding. Source: U. S. Department of Commerce, Bureau of Economic Analysis