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U.S. International Transactions, First Quarter 2021 and Annual Update

Summary:
Current Account Balance, First Quarter The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by .7 billion, or 11.8 percent, to 5.7 billion in the first quarter of 2021, according to statistics from the U.S. Bureau of Economic Analysis (BEA). The revised fourth quarter deficit was 5.1 billion. The first quarter deficit was 3.6 percent of current dollar gross domestic product, up from 3.3 percent in the fourth quarter. The .7 billion widening of the current account deficit in the first quarter mostly reflected an increased deficit on goods and a reduced surplus on primary income. COVID-19 Impact on First Quarter 2021 International Transactions

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Current Account Balance, First Quarter

The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $20.7 billion, or 11.8 percent, to $195.7 billion in the first quarter of 2021, according to statistics from the U.S. Bureau of Economic Analysis (BEA). The revised fourth quarter deficit was $175.1 billion.

The first quarter deficit was 3.6 percent of current dollar gross domestic product, up from 3.3 percent in the fourth quarter.

The $20.7 billion widening of the current account deficit in the first quarter mostly reflected an increased deficit on goods and a reduced surplus on primary income.

U.S. International Transactions, First Quarter 2021 and Annual Update

COVID-19 Impact on First Quarter 2021 International Transactions

All major categories of current account transactions increased in the first quarter of 2021, the third consecutive quarter of broad-based growth following notable COVID-19-related declines in the second quarter of 2020. The full economic effects of the COVID-19 pandemic cannot be quantified in the statistics because the impacts are generally embedded in source data and cannot be separately identified. For more information on the impact of COVID-19 on the statistics, see the technical note that accompanies this release.

Current Account Transactions (tables 1-5)

Exports of goods and services to, and income received from, foreign residents increased $36.8 billion, to $888.7 billion, in the first quarter. Imports of goods and services from, and income paid to, foreign residents increased $57.5 billion, to $1.08 trillion.

U.S. International Transactions, First Quarter 2021 and Annual Update

Trade in Goods (table 2)

Exports of goods increased $24.5 billion, to $408.6 billion, and imports of goods increased $39.9 billion, to $677.0 billion. The increases in both exports and imports reflected increases in nearly all major categories, led by industrial supplies and materials, primarily petroleum and products, that were partly offset by a decrease in automotive vehicles, parts, and engines.

Trade in Services (table 3)

Exports of services  increased $1.1 billion, to $175.9 billion, reflecting mostly offsetting changes in several major categories. Increases were led by travel, mainly other personal travel; decreases were led by charges for the use of intellectual property, mainly for licenses to reproduce and/or distribute computer software. Imports of services increased $1.8 billion, to $120.2 billion, mostly reflecting an increase in transport, primarily sea freight transport.

Primary Income (table 4)

Receipts of primary income increased $9.6 billion, to $261.7 billion, mostly reflecting an increase in direct investment income, primarily earnings. Payments of primary income increased $13.5 billion, to $211.4 billion, mainly reflecting increases in direct investment income, mostly earnings, and in portfolio investment income, mostly interest on long-term debt securities.

Secondary Income (table 5)

Receipts of secondary income increased $1.6 billion, to $42.6 billion, mostly reflecting an increase in general government transfers, primarily public sector fines and penalties. Payments of secondary income increased $2.3 billion, to $75.9 billion, mainly reflecting an increase in general government transfers, primarily international cooperation.

Capital Account Transactions (table 1)

Capital transfer payments increased $1.6 billion, to $2.8 billion in the first quarter, mostly reflecting an increase in investment grants.

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

Net financial account transactions were −$175.2 billion in the first quarter, reflecting net U.S. borrowing from foreign residents.

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

First quarter transactions increased U.S. residents’ foreign financial assets by $382.0 billion. Transactions increased portfolio investment assets, primarily long-term debt securities, by $304.7 billion; direct investment assets, primarily equity, by $64.0 billion; and other investment assets, primarily loans, by $15.4 billion. Transactions decreased reserve assets by $2.1 billion.

Liabilities (tables 1, 6, 7, and 8)

First quarter transactions increased U.S. liabilities to foreign residents by $554.9 billion. Transactions increased portfolio investment liabilities, primarily long-term debt securities, by $326.5 billion; other investment liabilities, primarily deposits and loans, by $163.9 billion; and direct investment liabilities, primarily equity, by $64.5 billion.

Financial Derivatives (table 1)

Net transactions in financial derivatives were −$2.3 billion in the first quarter, reflecting net U.S. borrowing from foreign residents.

Updates to Fourth Quarter 2020 International Transactions Accounts Balances

Billions of dollars, seasonally adjusted
  Preliminary estimate Revised estimate
Current account balance −188.5 −175.1
    Goods balance −253.0 −253.1
    Services balance 53.0 56.3
    Primary income balance 47.9 54.2
    Secondary income balance −36.4 −32.5
Net financial account transactions −262.4 −271.2

Annual Update of the International Transactions Accounts (table 9)

The statistics in this release reflect the annual update of the U.S. international transactions accounts. With this update, BEA has incorporated newly available and revised source data for 2018–2020 and updated seasonal adjustments for 2016–2020 for most statistical series. The major exceptions are 1) direct investment positions, transactions in financial assets and liabilities, and related income receipts and payments for 2017–2020, which are revised to incorporate the results of BEA's 2017 Benchmark Survey of Foreign Direct Investment in the United States, and 2) insurance services exports and imports and insurance-related transfers in secondary income receipts and payments for 2013–2020, which are revised to incorporate the results of BEA's 2018 Benchmark Survey of Insurance Transactions by U.S. Insurance Companies with Foreign Persons.

Newly Available and Revised Source Data: Key Providers and Years Affected

Agency Data Years affected
BEA Benchmark and quarterly insurance services surveys 2013–2020
Benchmark, annual, and quarterly direct investment surveys 2017–2020
Quarterly international services surveys 2018–2020
U.S. Census Bureau Revised source data for Census-basis goods 2018–2020
U.S. Department of the Treasury Annual portfolio investment surveys 2019–2020
Quarterly and monthly portfolio and other investment surveys 2017–2020

More information is available in “Preview of the 2021 Annual Update of the International Economic Accounts” in the April 2021 issue of the Survey of Current Business, and additional information will be provided in the July issue. An updated and expanded version of the U.S. International Economic Accounts: Concepts and Methods will be available in July 2021.

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Next release: September 21, 2021 at 8:30 A.M. EDT
U.S. International Transactions, Second Quarter 2021

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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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