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U.S. International Investment Position, 4th quarter and year 2017

Summary:
Fourth Quarter 2017 The U.S. net international investment position decreased to -,845.8 billion (preliminary) at the end of the fourth quarter from -,739.7 billion (revised) at the end of the third quarter, according to statistics released by the Bureau of Economic Analysis (BEA). The 6.1 billion decrease reflected a 7.2 billion increase in U.S. assets and an 3.3 billion increase in U.S. liabilities (table 1). The 6.1 billion decrease in the net investment position reflected net financial transactions of -.4 billion and net other changes in position, such as price and exchange-rate changes, of -.8 billion (table A). The net investment position decreased 1.4 percent in the fourth quarter, compared with an increase of 3.3

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Fourth Quarter 2017

The U.S. net international investment position decreased to -$7,845.8 billion (preliminary) at the end of the fourth quarter from -$7,739.7 billion (revised) at the end of the third quarter, according to statistics released by the Bureau of Economic Analysis (BEA). The $106.1 billion decrease reflected a $727.2 billion increase in U.S. assets and an $833.3 billion increase in U.S. liabilities (table 1).

U.S. International Investment Position, 4th quarter and year 2017

The $106.1 billion decrease in the net investment position reflected net financial transactions of -$52.4 billion and net other changes in position, such as price and exchange-rate changes, of -$53.8 billion (table A).

The net investment position decreased 1.4 percent in the fourth quarter, compared with an increase of 3.3 percent in the third quarter. The net investment position decreased an average of 5.0 percent per quarter from the first quarter of 2011 through the second quarter of 2017.

U.S. assets increased $727.2 billion to $27,632.8 billion at the end of the fourth quarter, mostly reflecting increases in portfolio investment and direct investment assets.

  • Assets excluding financial derivatives increased $809.8 billion to $26,010.4 billion. The increase resulted from other changes in position of $658.8 billion and financial transactions of $151.0 billion (table A). Other changes in position mostly reflected (1) foreign equity price increases that raised the value of portfolio investment and direct investment equity assets and (2) the appreciation of major foreign currencies against the U.S. dollar that raised the value of foreign-currency-denominated assets in dollar terms. Financial transactions mostly reflected net acquisition of portfolio investment debt securities and direct investment equity assets.
  • Financial derivatives decreased $82.6 billion to $1,622.5 billion, mostly in single-currency interest rate contracts and foreign exchange contracts.
Table A. Quarterly Change in the U.S. Net International Investment PositionBillions of dollars, not seasonally adjusted
Position, 2017:III Change in position in 2017:IV Position, 2017:IV
Total Attributable to:
Financial transactions Other changes in position 1
U.S. net international investment position -7,739.7 -106.1 -52.4 -53.8 -7,845.8
Net position excluding financial derivatives -7,773.5 -100.6 -53.2 -47.5 -7,874.1
Financial derivatives other than reserves, net 33.8 -5.5 0.8 -6.3 28.3
U.S. assets 26,905.6 727.2 (2) (2) 27,632.8
Assets excluding financial derivatives 25,200.5 809.8 151.0 658.8 26,010.4
Financial derivatives other than reserves 1,705.1 -82.6 (2) (2) 1,622.5
U.S. liabilities 34,645.3 833.3 (2) (2) 35,478.6
Liabilities excluding financial derivatives 32,974.0 910.5 204.2 706.3 33,884.4
Financial derivatives other than reserves 1,671.3 -77.1 (2) (2) 1,594.2
1 Disaggregation of other changes in position into price changes, exchange-rate changes, and other changes in volume and valuation is only presented for annual statistics released in June each year.
2 Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

U.S. liabilities increased $833.3 billion to $35,478.6 billion at the end of the fourth quarter, mostly reflecting increases in portfolio investment and direct investment liabilities.

  • Liabilities excluding financial derivatives increased $910.5 billion to $33,884.4 billion. The increase resulted from other changes in position of $706.3 billion and financial transactions of $204.2 billion (table A). Other changes in position mostly reflected U.S. equity price increases that raised the value of portfolio investment and direct investment equity liabilities. Financial transactions reflected net incurrence of liabilities in all major investment categories.
  • Financial derivatives decreased $77.1 billion to $1,594.2 billion, mostly in single-currency interest rate contracts and foreign exchange contracts.

Updates to Statistics

Table B. Updates to Third Quarter 2017 International Investment Position Aggregates Billions of dollars, not seasonally adjusted
  Preliminary estimate Revised estimate
U.S. net international investment position -7,768.7 -7,739.7
  U.S. assets 26,854.9 26,905.6
    Direct investment at market value 8,580.6 8,595.4
    Portfolio investment 11,860.1 11,905.5
    Financial derivatives other than reserves 1,705.1 1,705.1
    Other investment 4,252.5 4,243.0
    Reserve assets 456.6 456.6
  U.S. liabilities 34,623.6 34,645.3
    Direct investment at market value 8,452.8 8,454.1
    Portfolio investment 19,043.2 19,057.9
    Financial derivatives other than reserves 1,671.3 1,671.3
    Other investment 5,456.2 5,461.9

Year 2017

The U.S. net international investment position increased to -$7,845.8 billion (preliminary) at the end of 2017 from -$8,318.4 billion at the end of 2016. The $472.6 billion increase reflected a $3,783.4 billion increase in U.S. assets and a $3,310.8 billion increase in U.S. liabilities.

U.S. assets increased $3,783.4 billion to $27,632.8 billion at the end of 2017, mostly reflecting increases in portfolio investment and direct investment assets that were partly offset by a decrease in financial derivatives.

  • Assets excluding financial derivatives increased $4,369.9 billion to $26,010.4 billion. The increase resulted from other changes in position of $3,157.5 billion and financial transactions of $1,212.4 billion (table C). Other changes in position mostly reflected (1) foreign equity price increases that raised the value of portfolio investment and direct investment equity assets and (2) the appreciation of major foreign currencies against the U.S. dollar that raised the value of foreign-currency-denominated assets in dollar terms. Financial transactions reflected net acquisition of assets in all major investment categories, except reserve assets.
  • Financial derivatives decreased $586.5 billion to $1,622.5 billion, mostly in single-currency interest rate contracts and foreign exchange contracts.
Table C. Annual Change in the U.S. Net International Investment PositionBillions of dollars
Position, 2016 Change in position in 2017 Position, 2017
Total Attributable to:
Financial transactions Other changes in position 1
U.S. net international investment position -8,318.4 472.6 -349.2 821.8 -7,845.8
Net position excluding financial derivatives -8,379.7 505.6 -375.6 881.2 -7,874.1
Financial derivatives other than reserves, net 61.3 -33.0 26.4 -59.4 28.3
U.S. assets 23,849.4 3,783.4 (2) (2) 27,632.8
Assets excluding financial derivatives 21,640.5 4,369.9 1,212.4 3,157.5 26,010.4
Financial derivatives other than reserves 2,209.0 -586.5 (2) (2) 1,622.5
U.S. liabilities 32,167.8 3,310.8 (2) (2) 35,478.6
Liabilities excluding financial derivatives 30,020.1 3,864.3 1,587.9 2,276.4 33,884.4
Financial derivatives other than reserves 2,147.7 -553.5 (2) (2) 1,594.2
1Disaggregation of other changes in position into price changes, exchange-rate changes, and other changes in volume and valuation is only presented for annual statistics released in June each year.
2Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

U.S. liabilities increased $3,310.8 billion to $35,478.6 billion at the end of 2017, mostly reflecting increases in portfolio investment and direct investment liabilities that were partly offset by a decrease in financial derivatives.

  • Liabilities excluding financial derivatives increased $3,864.3 billion to $33,884.4 billion. The increase resulted from other changes in position of $2,276.4 billion and financial transactions of $1,587.9 billion (table C). Other changes in position mostly reflected U.S. equity price increases that raised the value of portfolio investment and direct investment equity liabilities. Financial transactions reflected net incurrence of liabilities in all major investment categories.
  • Financial derivatives decreased $553.5 billion to $1,594.2 billion, mostly in single-currency interest rate contracts and foreign exchange contracts.

Notice of Upcoming Update to the U.S. Net International Investment Position

The annual update of the U.S. net international investment position will be released along with preliminary estimates for the first quarter of 2018 on June 27, 2018. An article previewing the annual update will appear in the May 2018 issue of the Survey of Current Business.

Next release: June 27, 2018, at 8:30 A.M. EDT
U.S. Net International Investment Position, First Quarter 2018, Year 2017, and Annual Update

*              *              *

U.S. Net International Investment Position Release Dates in 2018
Fourth Quarter and Year 2017 March 30
First Quarter 2018, Year 2017, and Annual Update June 27
Second Quarter 2018 September 26
Third Quarter 2018 December 27

Additional Information

Resources

Definitions

The international investment position (IIP) is a statistical balance sheet that presents the dollar value of U.S. financial assets and liabilities with respect to foreign residents at a specific point in time. BEA presents IIP statistics at the end of a quarter or year (March, June, September, and December). For the June release, BEA also presents statistics on changes in the yearend position that are disaggregated into financial transactions, price changes, exchange-rate changes, and changes in volume and valuation not included elsewhere (n.i.e.).

The U.S. net international investment position is defined as the value of U.S. assets less the value of U.S. liabilities.

Financial transactions are transactions between U.S. residents and nonresidents in financial assets and liabilities. They are also recorded in the financial account of the international transactions accounts (ITAs). See Related Statistics below.

Other changes in position are changes in the value of U.S. assets or liabilities arising from any source besides a financial transaction. Other changes in position include price changes, exchange-rate changes, and changes in volume and valuation not included elsewhere (n.i.e.).

Price changes (only presented for annual statistics in the June news release) are changes in the value of an asset or liability due to changes in the market price of a financial instrument.

Exchange-rate changes (only presented for annual statistics in the June news release) are changes in the value of foreign-currency denominated assets and liabilities due to changes in the values of foreign currencies relative to the value of the U.S. dollar.

Changes in volume and valuation n.i.e. (only presented for annual statistics in the June news release) reflect changes in position due to year-to-year shifts in the composition of reporting panels, the incorporation of more comprehensive annual and benchmark survey results, and revaluations (holding gains and losses) on assets and liabilities that are not explained by price changes or exchange-rate changes.

Functional categories are the primary classification system used in the IIP and in the financial account of the ITAs. The five functional categories are direct investment, portfolio investment, financial derivatives other than reserves, other investment, and reserve assets. While the functional categories are based on features that are relevant for understanding cross-border financial transactions and positions, they also take into account some aspects of the relationship between transactors and the economic motivation for the investment. Within the functional categories, the IIP accounts are classified by type of financial instrument.

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 voting securities of an entity in another economy is the threshold for separating direct investment from other types of investment. Direct investment positions include positions in equity and debt instruments. BEA's IIP statistics feature the market value measure of direct investment positions, a measure that values owner's equity at current-period prices using indexes of stock market prices.

Portfolio investment consists of cross-border positions involving equity and investment fund shares and debt securities, excluding those included in direct investment or reserve assets. Debt securities are classified by original maturity (short term vs. long term at the time of issue).

Financial derivatives other than reserves consist of cross-border positions arising from financial contracts that are linked to underlying financial instruments, commodities, or indicators. Positions in financial derivatives consist of contracts with positive and negative fair values. A contract with a positive fair value is a U.S. asset and represents the amount that a foreign resident would have to pay to a U.S. counterparty if the contract were terminated or settled. A contract with a negative fair value is a U.S. liability and represents the amount that a U.S. resident would have to pay to a foreign counterparty if the contract were terminated or settled. The gross positive (negative) fair value is the sum across all contracts with positive (negative) fair values. Fair values differ from notional values, which are the underlying amounts used to calculate payments on contracts. Gross positive and gross negative fair values for financial derivatives positions are available separately in table 1. However, transactions and other changes in financial derivatives positions are only available for the net position in financial derivatives. For other changes in position for financial derivatives presented in the June news release, statistics are not separately available for price changes, exchange-rate changes, and changes in volume and valuation n.i.e.

Other investment includes cross-border positions other than those included in direct investment, portfolio investment, financial derivatives, and reserve assets. Other investment positions consist of positions 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 U.S. 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.

Release and update schedule

Preliminary quarterly IIP account statistics are released in March, June, September, and December, approximately 90 days after the end of the reference quarter. These statistics are updated the following quarter to incorporate new and revised source data. Quarterly statistics are open for revision for at least the prior three years in annual updates released in June. Preliminary annual statistics are released in March reflecting positions at the end of the fourth quarter of the previous year. These annual statistics are open for revision for at least the prior three years in subsequent annual updates.

Related statistics

The IIP statistics 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 transactions accounts (ITAs) are released quarterly. Financial transactions reported in the financial account of the ITAs are one type of change in position recorded in the IIP. Financial transactions are transactions between U.S. residents and nonresidents for direct investment, portfolio investment, other investment, reserve assets, and financial derivatives.

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 include detailed annual information on trade in services and on services supplied through the channel of direct investment by affiliates of multinational enterprises.

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. Net International Investment Position at the End of the Period

Bureau of Economic Analysis
The BEA Advisory Committee advises the Director of BEA on matters related to the development and improvement of BEA’s national, regional, industry, and international economic accounts, especially in areas of new and rapidly growing economic activities arising from innovative and advancing technologies, and provides recommendations from the perspectives of the economics profession, business, and government.

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