10.09.07
U.S. Net International Investment Position at Yearend 2006
FOR WIRE TRANSMISSION: 8:30 A.M. EDT, THURSDAY, June 28, 2007
Elena L. Nguyen: (202) 606-9555 BEA 07-31
Christopher A. Gohrband: (202) 606-9564
U.S. Net International Investment Position at Yearend 2006
The U.S. net international investment position at yearend 2006 was
-$2,539.6 billion (preliminary), as the value of foreign investments in the
United States continued to exceed the value of U.S. investments abroad (table
1). At yearend 2005, the U.S. net international investment position was
-$2,238.4 billion (revised). The U.S. net international investment position
includes newly introduced comprehensive estimates of U.S. cross-border
transactions and positions in financial derivatives (see box 1).
The -$301.3 billion change in the U.S. net investment position from
yearend 2005 to yearend 2006 was largely due to especially strong net foreign
purchases of U.S. securities. The impact of these net purchases was partly
offset by price appreciation of U.S.-held foreign stocks that surpassed by a
large amount price appreciation of foreign-held U.S. stocks, and by exchange-
rate changes resulting from the appreciation of most major foreign currencies
against the U.S. dollar, which raised the dollar value of U.S.-owned assets
abroad.
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Box 1. Introduction of Comprehensive Data on Financial Derivatives
BEA is incorporating newly available, comprehensive data on financial
derivatives into the U.S. international investment position. Data are available
for derivatives positions at yearend 2005 and 2006 and for derivatives
transactions (financial flows) in 2006. Derivatives positions with a positive
value to U.S. residents are recorded as part of U.S.-owned assets abroad, and
derivatives positions with a negative value to U.S. residents are recorded as
part of foreign-owned assets in the United States. Derivatives transactions
(financial flows) are reported on a net basis and cannot be separated into
transactions for positions with positive value and positions with negative
value. A discussion of the comprehensive data will appear in the July issue of
the Survey of Current Business.
The new data are the result of a multiyear effort by the U.S. Treasury
Department, the Federal Reserve Board, the Federal Reserve Bank of New York,
and BEA to close a major gap in the international investment position and
international transactions accounts.
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The following are highlights for 2006:
* Foreign acquisitions of financial assets in the United States, excluding
financial derivatives, were $1,859.6 billion in 2006, up from $1,204.2
billion in 2005. Both net foreign official purchases of U.S. securities
and net foreign private purchases of U.S. securities other than Treasury
securities were especially strong; increases in liabilities reported by
U.S. banks and U.S. nonbanks accelerated from last years pace; and
foreign direct investment in the United States picked up.
* U.S. acquisitions of financial assets abroad, excluding financial
derivatives, were $1,055.2 billion in 2006, up from $426.9 billion in
2005. U.S. direct investment abroad rebounded strongly; increases in
claims reported by U.S. banks and U.S. nonbanks accelerated from last
years pace; and net U.S. purchases of foreign securities were a record.
* Price appreciation in most foreign stock markets substantially increased
the value of U.S. holdings of foreign corporate stocks. Price
appreciation in the U.S. stock market also increased the value of foreign
holdings of U.S. corporate stocks, but by a much smaller amount.
* Appreciation of most major foreign currencies against the U.S. dollar
from yearend 2005 to yearend 2006 raised the dollar value of U.S.-owned
assets abroad, especially the value of U.S.-owned foreign corporate
stocks.
U.S.-owned assets abroad increased $2,178.7 billion to $13,755.0 billion.
U.S. holdings of foreign securities increased $1,086.4 billion to
$5,432.3 billion. Holdings of foreign stocks increased as a result of large
price appreciation, foreign-currency appreciation, and net U.S. purchases.
Holdings of foreign bonds increased mostly as a result of net U.S. purchases.
The stock of U.S. direct investment abroad at current cost increased
$320.4 billion to $2,855.6 billion, mostly as a result of net financial flows
(see box 2).
Claims on foreigners reported by U.S. banks increased $583.4 billion to
$3,089.0 billion.
Claims on unaffiliated foreigners reported by U.S. nonbanking concerns
increased $114.4 billion to $848.5 billion.
U.S. holdings of financial derivatives with positive fair value increased
$47.5 billion to $1,237.6 billion.
U.S. official reserve assets increased $31.8 billion to $219.9 billion.
Foreign-owned assets in the United States increased $2,479.9 billion to
$16,294.6 billion.
Foreign official assets in the United States increased $463.9 billion to
$2,770.2 billion. Net foreign purchases of U.S. Government securities
accounted for most of the increase.
Foreign private holdings of U.S. securities other than U.S. Treasury
securities increased $875.5 billion to $5,228.5 billion. Foreign holdings of
U.S. bonds increased mostly as a result of strong net foreign purchases.
Foreign holdings of U.S. stocks increased as a result of price appreciation and
net foreign purchases.
U.S. liabilities to private foreigners and international financial
institutions reported by U.S. banks increased $717.3 billion to $3,319.0
billion.
The stock of foreign direct investment in the United States at current
cost increased $231.2 billion to $2,099.4 billion, mostly as a result of net
financial flows (see box 2).
Liabilities to unaffiliated foreigners reported by U.S. nonbanking
concerns increased $182.5 billion to $740.4 billion.
U.S. holdings of financial derivatives with negative fair value increased
$46.5 billion to $1,178.6 billion.
U.S. currency held by foreigners increased $12.6 billion to $364.3
billion.
Foreign private holdings of U.S. Treasury securities decreased $49.6
billion to $594.2 billion, mostly as a result of net foreign sales.
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Box 2. Valuation Methods for Direct Investment
Direct investment at current cost is BEA's featured measure of direct
investment in current-period prices. The current-cost method values the U.S.
and foreign parents' share of their affiliates' investment in plant and
equipment using the current cost of capital equipment, in land using general
price indexes, and in inventories using estimates of their replacement cost.
Direct investment at market value is an alternative measure of direct
investment in current-period prices. The market-value method values the owners'
equity component of the direct investment position using indexes of stock
market prices.
The historical-cost method values assets and liabilities at their book
value. Country and industry detail can be shown only under this method. Data
on this basis are not presented in this release.
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* * *
Revisions
The previously published U.S. net international investment position at
yearend 2005 was -$2,693.8 billion. The revised position estimates reflect
newly introduced comprehensive data on U.S. cross-border transactions and
positions in financial derivatives; the new data begin with the 2005 yearend
position. U.S. holdings of foreign securities for 2005 were revised to
incorporate results from the U.S. Treasury Departments annual survey of
securities claims for December 2005. Foreign holdings of U.S. Treasury
securities, other U.S. securities, and short-term instruments reported by U.S.
banks were revised for 2004-2005 to incorporate results from the U.S. Treasury
Departments annual surveys of securities liabilities for June 2005 (revised)
and June 2006.
In addition to the above improvements, all estimates were revised as a
result of newly available or revised quarterly source data. Revisions
attributable to these updated source data were for 2003-2005. The net result
of revisions from all sources raised the value of U.S. assets abroad relative
to the value of foreign assets in the United States for 2004-2005. For 2003,
the net result of revisions from all sources lowered the value of U.S. assets
abroad relative to the value of foreign assets in the United States.
A more detailed discussion of the U.S. net international investment
position at yearend 2006 and revised historical data will appear in the July
issue of the Survey of Current Business. That issue will also contain an
article about historical-cost direct investment positions, with detail by
country and industry, and revised direct investment historical data.
* * *
BEAs national, international, regional, and industry estimates; the
Survey of Current Business; and BEA news releases are available without charge
on BEAs Web site at www.bea.gov. By visiting the site, you can also subscribe
to receive free e-mail summaries of BEA releases and announcements.
Table 1. International Investment Position of the United States at Yearend, 2005 and 2006
[Millions of dollars]
Changes in position in 2006 (decrease (-), increase (+))
Attributable to:
Valuation adjustments
Line Type of investment
Position, Position,
2005 r Exchange- 2006 p
Financial Price rate Other
flows changes changes/1/ changes/2/ Total
(a) (b) (c) (d) (a+b+c+d)
1 Net international investment position of the United States (lines 2+3)............................ -2,238,359 -833,183 347,585 220,653 -36,325 -301,270 -2,539,629
2 Financial derivatives, net (line 5 less line 25) /3/............................................ 57,915 -28,762 /4/ /4/ /4/29,782 1,020 58,935
3 Net international investment position, excluding financial derivatives (line 6 less line 26).... -2,296,274 -804,421 347,585 220,653 -66,107 -302,290 -2,598,564
4 U.S.-owned assets abroad (lines 5+6)............................................................ 11,576,336 /3/ /3/ /3/ /3/ 2,178,654 13,754,990
5 Financial derivatives, gross positive fair value.............................................. 1,190,029 /3/ /3/ /3/ /3/ 47,535 1,237,564
6 U.S.-owned assets abroad, excluding financial derivatives (lines 7+12+17)..................... 10,386,307 1,055,176 675,909 268,603 131,431 2,131,119 12,517,426
7 U.S. official reserve assets.................................................................. 188,043 -2,374 31,123 3,092 -31 31,810 219,853
8 Gold........................................................................................ 134,175 0 /5/31,123 ..... /6/-31 31,092 165,267
9 Special drawing rights...................................................................... 8,210 223 ..... 437 0 660 8,870
10 Reserve position in the International Monetary Fund......................................... 8,036 -3,331 ..... 335 0 -2,996 5,040
11 Foreign currencies.......................................................................... 37,622 734 ..... 2,320 0 3,054 40,676
12 U.S. Government assets, other than official reserve assets.................................... 77,523 -5,346 ..... ..... 12 -5,334 72,189
13 U.S. credits and other long-term assets /7/................................................. 76,960 -5,337 ..... ..... 12 -5,325 71,635
14 Repayable in dollars..................................................................... 76,687 -5,337 ..... ..... 12 -5,325 71,362
15 Other /8/................................................................................ 273 0 ..... ..... ..... 0 273
16 U.S. foreign currency holdings and U.S. short-term assets................................... 563 -9 ..... ..... ..... -9 554
17 U.S. private assets........................................................................... 10,120,741 1,062,896 644,786 265,511 131,450 2,104,643 12,225,384
18 Direct investment at current cost........................................................... 2,535,188 235,358 46,009 39,188 -124 320,431 2,855,619
19 Foreign securities.......................................................................... 4,345,884 289,422 598,777 198,181 0 1,086,380 5,432,264
20 Bonds.................................................................................... 1,028,179 150,884 -12,032 13,727 0 152,579 1,180,758
21 Corporate stocks......................................................................... 3,317,705 138,538 610,809 184,454 0 933,801 4,251,506
22 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns................. 734,034 83,531 ..... 13,075 17,824 114,430 848,464
23 U.S. claims reported by U.S. banks, not included elsewhere.................................. 2,505,635 454,585 ..... 15,067 113,750 583,402 3,089,037
24 Foreign-owned assets in the United States (lines 25+26)......................................... 13,814,695 /3/ /3/ /3/ /3/ 2,479,924 16,294,619
25 Financial derivatives, gross negative fair value.............................................. 1,132,114 /3/ /3/ /3/ /3/ 46,515 1,178,629
26 Foreign-owned assets in the Unites States, excluding financial derivatives (lines 27+34).. ... 12,682,581 1,859,597 328,324 47,950 197,538 2,433,409 15,115,990
27 Foreign official assets in the United States.................................................. 2,306,292 440,264 20,840 ..... 2,769 463,873 2,770,165
28 U.S. Government securities.................................................................. 1,725,193 380,734 -8,563 ..... 7,332 379,503 2,104,696
29 U.S. Treasury securities................................................................. 1,340,598 189,181 -8,600 ..... -411 180,170 1,520,768
30 Other.................................................................................... 384,595 191,553 37 ..... 7,743 199,333 583,928
31 Other U.S. Government liabilities /9/....................................................... 15,866 3,133 ..... ..... 0 3,133 18,999
32 U.S. liabilities reported by U.S. banks, not included elsewhere............................. 296,647 22,040 ..... ..... -22,000 40 296,687
33 Other foreign official assets............................................................... 268,586 34,357 29,403 ..... 17,437 81,197 349,783
34 Other foreign assets.......................................................................... 10,376,289 1,419,333 307,484 47,950 194,769 1,969,536 12,345,825
35 Direct investment at current cost........................................................... 1,868,245 180,580 32,495 3,916 14,190 231,181 2,099,426
36 U.S. Treasury securities.................................................................... 643,793 -35,931 -9,233 ..... -4,386 -49,550 594,243
37 U.S. securities other than U.S. Treasury securities......................................... 4,352,998 591,951 284,222 25,419 -26,054 875,538 5,228,536
38 Corporate and other bonds................................................................ 2,243,135 449,194 -12,143 25,419 -15,789 446,681 2,689,816
39 Corporate stocks......................................................................... 2,109,863 142,757 296,365 ..... -10,265 428,857 2,538,720
40 U.S. currency............................................................................... 351,706 12,571 ..... ..... 0 12,571 364,277
41 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns............ 557,840 235,769 ..... 9,605 -62,849 182,525 740,365
42 U.S. liabilities reported by U.S. banks, not included elsewhere............................. 2,601,707 434,393 ..... 9,010 273,868 717,271 3,318,978
Memoranda:
43 Direct investment abroad at market value.......................................................... 3,570,252 235,358 393,709 179,732 -1,221 807,578 4,377,830
44 Direct investment in the United States at market value............................................ 2,806,029 180,580 226,483 ..... 9,387 416,450 3,222,479
p Preliminary
r Revised
..... Not applicable
1. Represents gains or losses on foreign-currency-denominated assets and liabilities due to their revaluation at current exchange rates.
2. Includes changes in coverage, capital gains and losses of direct investment affiliates, and other adjustments to the value of assets and liabilities.
3. Financial flows and valuation adjustments for financial derivatives are available only on a net basis; they are not separately available for gross positive fair values and
gross negative fair values of financial derivatives. Consequently, financial flows and valuation adjustments for financial derivatives are shown only on line 2; columns (a)
through (d) on lines 4, 5 and 24, 25 are not available.
4. Data are not separately available for the three types of valuation adjustments; therefore, the sum of all three types is shown in column (d). Price changes result from
changes in the value of derivatives contracts due to changes in the value of their underlying assets or reference rates, which may arise from movements in interest rates, stock
prices, commodity prices, or other variables. Exchange-rate changes result from the revaluation of foreign-currency-denominated derivatives contracts at current exchange rates.
"Other changes" can result when data on investment positions that had accumulated in prior periods are covered by a new or more complete survey.
5. Reflects changes in the value of the official gold stock due to fluctuations in the market price of gold.
6. Reflects changes in gold stock from U.S. Treasury sales of gold medallions and commemorative and bullion coins; also reflects replenishment through open market purchases.
These demonetizations/monetizations are not included in international transactions financial flows.
7. Also includes paid-in capital subscriptions to international financial institutions and outstanding amounts of miscellaneous claims that have been settled through international
agreements to be payable to the U.S. Government over periods in excess of 1 year. Excludes World War I debts that are not being serviced.
8. Includes indebtedness that the borrower may contractually, or at its option, repay with its currency, with a third country's currency, or by delivery of materials or transfer of
services.
9. Primarily U.S. Government liabilities associated with military sales contracts and other transactions arranged with or through foreign official agencies.
Source: Bureau of Economic Analysis
Originaly from Source