FOR WIRE TRANSMISSION: 8:30 A.M. EST, MONDAY, December 17, 2007 Douglas B. Weinberg: (202) 606-9590 BEA 07-57 U.S. International Transactions: Third Quarter 2007 Current Account The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--decreased to $178.5 billion (preliminary) in the third quarter of 2007 from $188.9 billion (revised) in the second quarter. Increases in the surpluses on income and on services and a decrease in the deficit on goods more than accounted for the decrease. An increase in net unilateral current transfers to foreigners was partly offsetting. Goods and services The deficit on goods and services decreased to $173.2 billion in the third quarter from $178.4 billion in the second. Goods The deficit on goods decreased to $199.7 billion in the third quarter from $204.2 billion in the second. Goods exports increased to $297.9 billion from $279.3 billion. The largest increases were in capital goods; in foods, feeds, and beverages; in nonagricultural industrial supplies and materials; and in automotive vehicles, parts, and engines. Goods imports increased to $497.6 billion from $483.6 billion. The largest increases were in automotive vehicles, parts, and engines; in petroleum and products; and in capital goods. Services The surplus on services increased to $26.5 billion in the third quarter from $25.8 billion in the second. Services receipts increased to $119.8 billion from $117.2 billion. The increase was largely accounted for by an increase in travel. Royalties and license fees, “other” transportation (such as freight and port services), and passenger fares also increased. Services payments increased to $93.2 billion from $91.4 billion. The largest increases were in travel, in “other” private services (such as business, professional, and technical services, insurance services, and financial services), in “other” transportation, and in passenger fares. Income The surplus on income increased to $20.5 billion in the third quarter from $12.7 billion in the second. Investment income Income receipts on U.S.-owned assets abroad increased to $204.9 billion from $194.7 billion. The increase was accounted for by increases in “other” private receipts (which consists of interest and dividends) and in direct investment receipts. Income payments on foreign-owned assets in the United States increased to $182.7 billion from $180.4 billion. Increases in “other” private payments (which consists of interest and dividends) and in U.S. Government payments (which consists of interest) were partly offset by a decrease in direct investment payments. Compensation of employees Receipts for compensation of U.S. workers abroad were virtually unchanged at $0.7 billion, and payments for compensation of foreign workers in the United States were virtually unchanged at $2.4 billion. Unilateral current transfers Net unilateral current transfers to foreigners were $25.8 billion in the third quarter, up from $23.2 billion in the second. The increase mainly resulted from increases in U.S. Government grants and in private remittances and other transfers. Capital Account Net capital account payments (outflows) were virtually unchanged at $0.6 billion in the third quarter. Financial Account Net financial inflows--net acquisitions by foreign residents of assets in the United States less net acquisitions by U.S. residents of assets abroad-- were $93.4 billion in the third quarter, down from $152.8 billion in the second. Net foreign acquisitions of assets in the United States slowed more than net U.S. acquisitions of assets abroad. U.S.-owned assets abroad U.S.-owned assets abroad increased $155.7 billion in the third quarter, following an increase of $465.5 billion in the second. U.S. claims on foreigners reported by U.S. banks increased $111.3 billion in the third quarter, following an increase of $211.0 billion in the second. Net U.S. purchases of foreign securities were $78.8 billion in the third quarter, down from $82.2 billion in the second. Net U.S. purchases of foreign stocks were $35.7 billion, down from $40.4 billion. Net U.S. purchases of foreign bonds were $43.2 billion, up from $41.8 billion. Net financial flows for U.S. direct investment abroad were $56.3 billion in the third quarter, down from $78.0 billion in the second. A substantial slowdown in net equity capital investment abroad and a slightly larger decrease in net intercompany debt investment abroad were partly offset by a pickup in reinvested earnings. U.S. official reserve assets increased $0.1 billion in the third quarter, following a decrease of less than $0.1 billion in the second. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $249.1 billion in the third quarter, following an increase of $619.3 billion in the second. U.S. liabilities to foreigners reported by U.S. banks increased $69.8 billion in the third quarter, following an increase of $144.0 billion in the second. Net foreign purchases of U.S. Treasury securities were $46.7 billion in the third quarter, up from $1.8 billion in the second. Transactions in U.S. securities other than U.S. Treasury securities shifted to net foreign sales of $44.2 billion in the third quarter from net foreign purchases of $243.0 billion in the second. Transactions in U.S. stocks shifted to net foreign sales of $19.7 billion from net foreign purchases of $104.1 billion. Transactions in U.S. corporate bonds shifted to net foreign sales of $8.2 billion from net foreign purchases of $109.7 billion. Transactions in federally sponsored agency bonds shifted to net foreign sales of $16.2 billion from net foreign purchases of $29.1 billion. Net financial flows for foreign direct investment in the United States were $81.2 billion in the third quarter, up from $46.6 billion in the second. The increase was accounted for by increases in net equity capital investment in the United States and in reinvested earnings and by a shift from a decrease to an increase in net intercompany debt investment in the United States. Foreign official assets in the United States increased $39.0 billion in the third quarter, following an increase of $70.5 billion in the second. Net U.S. currency shipments to foreigners were $4.7 billion in the third quarter, up from $3.3 billion in the second. The statistical discrepancy--errors and omissions in recorded transactions--was a positive $85.6 billion in the third quarter, compared with a positive $36.7 billion in the second. In the third quarter, the U.S. dollar depreciated 3 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 was revised to $188.9 billion from $190.8 billion. The goods deficit was unrevised at $204.2 billion; the services surplus was revised to $25.8 billion from $26.5 billion; the income surplus was revised to $12.7 billion from $9.4 billion; and unilateral current transfers were revised to net outflows of $23.2 billion from $22.5 billion. Net recorded financial inflows were revised to $152.8 billion from $150.9 billion. * * * Release dates in 2008: Fourth quarter and year 2007....................March 17, 2008 (Monday) First quarter 2008..............................June 17, 2008 (Tuesday) Second quarter 2008......................September 17, 2008 (Wednesday) Third quarter 2008........................December 17, 2008 (Wednesday) * * * Summary BEA estimates are available on recorded messages at the time of public release at the following telephone numbers: (202) 606-5306 Gross domestic product -5303 Personal income and outlays BEA’s national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA’s 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. December 17, 2007 Table 1. U.S. International Transactions [Millions of dollars, quarters seasonally adjusted] 2006 2007 Change: (Credits +, debits -) 2006 2007 I II III IV I II r III p II-III Current account 1 Exports of goods and services and income receipts...................................... 2,096,165 494,027 518,595 532,894 550,649 558,369 591,985 623,360 31,375 2 Exports of goods and services....................................................... 1,445,703 345,636 356,575 365,868 377,623 382,156 396,525 417,736 21,211 3 Goods, balance of payments basis................................................ 1,023,109 243,880 252,458 260,285 266,486 270,116 279,339 297,946 18,607 4 Services........................................................................ 422,594 101,756 104,117 105,583 111,137 112,040 117,186 119,790 2,604 5 Transfers under U.S. military agency sales contracts........................ 17,112 4,531 4,188 4,102 4,291 4,259 3,950 3,861 -89 6 Travel...................................................................... 85,694 20,845 21,212 21,527 22,110 22,297 23,584 25,331 1,747 7 Passenger fares............................................................. 22,187 5,397 5,328 5,696 5,765 5,706 6,066 6,316 250 8 Other transportation........................................................ 46,297 11,038 11,754 11,716 11,789 12,157 12,691 12,993 302 9 Royalties and license fees.................................................. 62,378 14,923 15,196 15,815 16,444 16,645 17,569 17,922 353 10 Other private services...................................................... 187,771 44,745 46,153 46,433 50,441 50,680 53,039 53,082 43 11 U.S. Government miscellaneous services...................................... 1,155 277 286 294 297 296 288 284 -4 12 Income receipts..................................................................... 650,462 148,391 162,020 167,026 173,025 176,213 195,460 205,624 10,164 13 Income receipts on U.S.-owned assets abroad..................................... 647,582 147,670 161,293 166,314 172,305 175,484 194,725 204,880 10,155 14 Direct investment receipts.................................................. 310,224 73,304 77,702 78,372 80,846 79,478 87,135 91,156 4,021 15 Other private receipts...................................................... 334,958 73,776 83,004 87,348 90,830 95,467 106,981 113,110 6,129 16 U.S. Government receipts.................................................... 2,400 590 587 594 629 539 609 614 5 17 Compensation of employees....................................................... 2,880 721 727 712 720 729 735 744 9 18 Imports of goods and services and income payments...................................... -2,818,047 -673,277 -700,504 -726,352 -717,914 -728,472 -757,747 -776,056 -18,309 19 Imports of goods and services....................................................... -2,204,225 -535,348 -549,153 -565,175 -554,549 -559,737 -574,956 -590,888 -15,932 20 Goods, balance of payments basis................................................ -1,861,380 -451,637 -463,734 -479,184 -466,825 -470,983 -483,552 -497,646 -14,094 21 Services........................................................................ -342,845 -83,711 -85,419 -85,991 -87,724 -88,754 -91,404 -93,242 -1,838 22 Direct defense expenditures................................................. -31,054 -7,726 -7,737 -7,990 -7,601 -7,924 -8,091 -8,139 -48 23 Travel...................................................................... -72,029 -17,582 -18,077 -18,015 -18,355 -18,582 -18,768 -19,406 -638 24 Passenger fares............................................................. -27,503 -6,748 -6,927 -6,889 -6,939 -6,799 -6,951 -7,221 -270 25 Other transportation........................................................ -65,282 -16,025 -16,401 -16,491 -16,365 -16,490 -16,681 -16,971 -290 26 Royalties and license fees.................................................. -26,432 -6,767 -6,532 -6,497 -6,636 -6,810 -6,898 -7,054 -156 27 Other private services...................................................... -116,524 -27,867 -28,728 -29,087 -30,841 -31,133 -32,997 -33,440 -443 28 U.S. Government miscellaneous services...................................... -4,021 -996 -1,016 -1,022 -987 -1,016 -1,018 -1,011 7 29 Income payments..................................................................... -613,823 -137,929 -151,352 -161,177 -163,365 -168,735 -182,791 -185,168 -2,377 30 Income payments on foreign-owned assets in the United States.................... -604,410 -135,607 -149,004 -158,823 -160,977 -166,422 -180,375 -182,726 -2,351 31 Direct investment payments.................................................. -136,010 -31,299 -33,055 -37,885 -33,772 -31,718 -36,751 -35,896 855 32 Other private payments...................................................... -334,645 -73,830 -83,037 -86,607 -91,171 -97,066 -104,146 -107,124 -2,978 33 U.S. Government payments.................................................... -133,755 -30,478 -32,912 -34,331 -36,034 -37,638 -39,478 -39,706 -228 34 Compensation of employees....................................................... -9,412 -2,322 -2,348 -2,354 -2,388 -2,313 -2,416 -2,442 -26 35 Unilateral current transfers, net...................................................... -89,595 -21,360 -23,686 -23,877 -20,673 -26,994 -23,157 -25,760 -2,603 36 U.S. Government grants.............................................................. -27,142 -5,671 -7,226 -7,741 -6,504 -10,372 -5,439 -7,373 -1,934 37 U.S. Government pensions and other transfers........................................ -6,508 -1,614 -1,627 -1,620 -1,647 -1,700 -1,731 -1,743 -12 38 Private remittances and other transfers............................................. -55,945 -14,075 -14,833 -14,516 -12,522 -14,922 -15,987 -16,644 -657 December 17, 2007 Table 1. U.S. International Transactions (Continued) [Millions of dollars, quarters seasonally adjusted] 2006 2007 Change: (Credits +, debits -) 2006 2007 I II III IV I II r III p II-III Capital account 39 Capital account transactions, net...................................................... -3,913 -1,724 -1,008 -545 -637 -559 -598 -554 44 Financial account 40 U.S.-owned assets abroad, excluding financial derivatives (increase/financial outflow (-))................................................... -1,055,176 -344,032 -212,218 -209,898 -289,028 -449,454 -465,466 -155,739 309,727 41 U.S. official reserve assets........................................................ 2,374 513 -560 1,006 1,415 -72 26 -54 -80 42 Gold............................................................................ 0 0 0 0 0 0 0 0 0 43 Special drawing rights.......................................................... -223 -67 -51 -54 -51 -43 -39 -37 2 44 Reserve position in the International Monetary Fund............................. 3,331 729 -351 1,275 1,678 212 294 230 -64 45 Foreign currencies.............................................................. -734 -149 -158 -215 -212 -241 -229 -247 -18 46 U.S. Government assets, other than official reserve assets.......................... 5,346 1,049 1,765 1,570 962 445 -369 422 791 47 U.S. credits and other long-term assets......................................... -2,992 -1,517 -376 -592 -507 -608 -1,348 -376 972 48 Repayments on U.S. credits and other long-term assets........................... 8,329 2,558 2,147 2,170 1,454 1,091 881 819 -62 49 U.S. foreign currency holdings and U.S. short-term assets....................... 9 8 -6 -8 15 -38 98 -21 -119 50 U.S. private assets................................................................. -1,062,896 -345,594 -213,423 -212,474 -291,405 -449,827 -465,123 -156,107 309,016 51 Direct investment............................................................... -235,358 -66,502 -53,744 -49,018 -66,094 -81,407 -77,980 -56,323 21,657 52 Foreign securities.............................................................. -289,422 -57,693 -59,003 -55,496 -117,230 -87,206 -82,203 -78,825 3,378 53 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns..... -83,531 -24,302 -45,885 -29,162 15,818 -47,830 -93,976 90,323 184,299 54 U.S. claims reported by U.S. banks, not included elsewhere...................... -454,585 -197,097 -54,791 -78,798 -123,899 -233,384 -210,964 -111,282 99,682 55 Foreign-owned assets in the United States, excluding financial derivatives (increase/financial inflow (+))..................................................... 1,859,597 538,140 355,442 449,987 516,029 616,602 619,272 249,126 -370,146 56 Foreign official assets in the United States........................................ 440,264 125,257 120,861 108,799 85,347 152,193 70,464 39,016 -31,448 57 U.S. Government securities...................................................... 380,734 112,338 65,626 107,972 94,798 110,772 43,275 17,818 -25,457 58 U.S. Treasury securities.................................................... 189,181 65,124 24,262 52,746 47,049 37,705 -13,125 -11,536 1,589 59 Other....................................................................... 191,553 47,214 41,364 55,226 47,749 73,067 56,400 29,354 -27,046 60 Other U.S. Government liabilities............................................... 3,133 26 824 1,154 1,129 654 -77 881 958 61 U.S. liabilities reported by U.S. banks, not included elsewhere................. 22,040 2,394 42,533 -7,221 -15,666 29,797 15,981 9,846 -6,135 62 Other foreign official assets................................................... 34,357 10,499 11,878 6,894 5,086 10,970 11,285 10,471 -814 63 Other foreign assets in the United States........................................... 1,419,333 412,883 234,581 341,188 430,682 464,409 548,808 210,110 -338,698 64 Direct investment............................................................... 180,580 42,976 49,056 42,979 45,570 11,906 46,550 81,245 34,695 65 U.S. Treasury securities........................................................ -35,931 -25,274 -19,307 -13,440 22,090 44,638 1,813 46,658 44,845 66 U.S. securities other than U.S. Treasury securities............................. 591,951 173,213 145,750 140,243 132,745 112,269 242,963 -44,177 -287,140 67 U.S. currency................................................................... 12,571 1,933 1,127 1,129 8,382 -1,631 3,347 4,741 1,394 68 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns 235,769 60,613 55,907 69,637 49,612 93,624 110,172 51,821 -58,351 69 U.S. liabilities reported by U.S. banks, not included elsewhere................. 434,393 159,422 2,048 100,640 172,283 203,603 143,963 69,822 -74,141 70 Financial derivatives, net............................................................. 28,762 1,633 14,001 14,911 -1,783 14,800 -1,007 n.a. 1,007 71 Statistical discrepancy (sum of above items with sign reversed)........................ -17,794 6,593 49,378 -37,121 -36,643 15,708 36,718 85,622 48,904 Memoranda: 72 Balance on goods (lines 3 and 20)...................................................... -838,271 -207,757 -211,276 -218,899 -200,339 -200,867 -204,213 -199,700 4,513 73 Balance on services (lines 4 and 21)................................................... 79,749 18,045 18,699 19,592 23,414 23,286 25,783 26,548 765 74 Balance on goods and services (lines 2 and 19)......................................... -758,522 -189,712 -192,577 -199,307 -176,926 -177,581 -178,431 -173,152 5,279 75 Balance on income (lines 12 and 29).................................................... 36,640 10,462 10,668 5,850 9,661 7,478 12,669 20,456 7,787 76 Unilateral current transfers, net (line 35)............................................ -89,595 -21,360 -23,686 -23,877 -20,673 -26,994 -23,157 -25,760 -2,603 77 Balance on current account (lines 1, 18, and 35 or lines 74, 75, and 76)............... -811,477 -200,611 -205,595 -217,334 -187,938 -197,097 -188,919 -178,456 10,463 p Preliminary r Revised n.a. Not available NOTE: Details may not add to totals because of rounding. Source: U. S. Bureau of Economic Analysis