The U.S. net international investment position at yearend 2008 was -$3,469.2
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
2007, the U.S. net international investment position was -$2,139.9 billion
(revised).

   The -$1,329.3 billion change in the U.S. net investment position from yearend
2007 to yearend 2008 resulted from (1) declines in the prices of U.S.-held
foreign stocks that surpassed declines in the prices of foreign-held U.S. stocks,
(2) the depreciation of most major currencies against the U.S. dollar that
lowered the dollar value of U.S.-owned assets abroad, and (3) net foreign
acquisitions of financial assets in the United States that exceeded net U.S.
acquisitions of financial assets abroad.  The impact of these differences was
partly offset by other changes (such as changes in reporting panels and
capital gains and losses) that raised the value of U.S.-owned assets abroad and
lowered the value of foreign-owned assets in the United States.

   The following are highlights for 2008:

*  Foreign acquisitions of financial assets in the United States, excluding
   financial derivatives, were $534.1 billion in 2008, down substantially from
   $2,129.5 billion in 2007.  In 2008, foreign acquisitions of Treasury
   securities and foreign direct investment in the United States were especially
   strong.  In contrast, foreign residents sold more U.S. securities other than
   Treasury securities than they purchased, and U.S. banks and nonbanks
   liabilities to foreign residents fell sharply.

*  U.S. acquisitions of financial assets abroad, excluding financial
   derivatives, were $0.1 billion in 2008, down substantially from $1,472.1
   billion in 2007.  In 2008, U.S. banks and nonbanks claims against foreign
   residents fell sharply and U.S. residents sold more foreign securities than
   they purchased.  However, U.S. direct investment abroad remained robust and
   U.S. government holdings of foreign currencies increased substantially as a
   result of unprecedented net drawings on temporary reciprocal currency
   arrangements between the U.S. Federal Reserve System and foreign central
   banks.

*  U.S. holdings of financial derivatives as assets (with positive gross value)
   increased $4,065.2 billion, and as liabilities (with negative gross value)
   increased $3,977.1 billion. These large changes are mainly due to increases
   in U.S. claims and liabilities from interest rate swap contracts, caused by
   sharp declines in yields on interest rate swaps in the first and fourth
   quarters of 2008. Because changes to U.S. assets and liabilities are
   offsetting, they have little impact on the net investment position.

*  Declining prices in most foreign stock markets lowered the value of U.S.
   holdings of foreign stocks by a large amount.  Declining prices in the U.S.
   stock market also lowered the value of foreign holdings of U.S. stocks, but
   by a smaller amount.  In 2008, prices of financial assets such as corporate
   stocks and bonds fell sharply but prices of U.S. Treasury securities and
   other high-grade government bonds appreciated, reflecting unsettled global
   financial market conditions and aggressive interest rate cuts from the
   Federal Reserve and other central banks.

*  Depreciation of most major foreign currencies against the U.S. dollar from
   yearend 2007 to yearend 2008 substantially lowered the dollar value of U.S.-
   owned assets abroad, especially the value of U.S.-owned foreign stocks.



   U.S.-owned assets abroad increased $1,609.3 billion to $19,888.2 billion.

   U.S. holdings of financial derivatives as assets (with positive gross value)
increased $4,065.2 billion to $6,624.5 billion.

   U.S. official reserve assets increased $16.5 billion to $293.7 billion and
U.S. government assets other than official reserve assets increased $529.6
billion to $624.1 billion.

   The stock of U.S. direct investment abroad at current cost increased $247.3
billion to $3,698.8 billion (see box).

   U.S. holdings of foreign securities decreased $2,590.8 billion to $4,244.3
billion, mainly due to a decrease in the value of U.S. holdings of foreign stocks.

   Claims on foreigners reported by U.S. banks decreased $410.8 billion to
$3,410.8 billion.

   Claims on foreigners reported by U.S. nonbanks decreased $247.8 billion to
$991.9 billion.


   Foreign-owned assets in the United States increased $2,938.6 billion to
$23,357.4 billion.

   U.S. holdings of financial derivatives as liabilities (with negative gross
value) increased $3,977.1 billion to $6,465.0 billion.

   Foreign official assets in the United States increased $467.4 billion to
$3,871.4 billion.

   Foreign private holdings of Treasury securities increased $245.3 billion to
$885.0 billion.

   The stock of foreign direct investment in the United States at current cost
increased $196.7 billion to $2,646.8 billion (see box below).

   Foreign private holdings of U.S. securities other than U.S. Treasury
securities decreased $1,486.5 billion to $4,703.5 billion, mainly due to
declines in the prices of foreign-held U.S. stocks.

   Liabilities to private foreign residents reported by U.S. banks decreased
$363.2 billion to $3,611.4 billion.

   Liabilities to private foreign residents reported by U.S. nonbanks decreased
$127.2 billion to $873.2 billion.

_______________________________________________________________________________
                    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.
_______________________________________________________________________________



                              *          *          *

                                     Revisions

   The previously published U.S. net international investment position at
yearend 2007 was -$2,441.8 billion.  The revised position estimates reflect the
incorporation of results from the U.S. Treasury Departments annual survey of
securities claims for December 2007 and annual survey of securities liabilities
for June 2008.

   In addition to the inclusion of survey and improved source data, estimates
were revised to incorporate newly available or revised quarterly source data.
Revisions attributable to these updated source data were for 2006-2007.
Revisions to the U.S. net international investment position from all sources
were $41.5 billion for 2006 and $301.9 billion for 2007.

   A more detailed discussion of the U.S. net international investment
position at yearend 2008 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.


                              *          *          *

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