FOR WIRE TRANSMISSION: 8:30 A.M. EDT, MONDAY, March 17, 2008 Douglas B. Weinberg: (202) 606-9590 BEA 08-09 U.S. International Transactions: Fourth Quarter and Year 2007 Fourth Quarter 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 $172.9 billion (preliminary) in the fourth quarter of 2007 from $177.4 billion (revised) in the third quarter. The decrease was more than accounted for by increases in the surpluses on income and on services. Increases in the deficit on goods and in net unilateral current transfers to foreigners were partly offsetting. Goods and services The deficit on goods and services increased to $177.9 billion in the fourth quarter from $172.6 billion in the third. Goods The deficit on goods increased to $208.1 billion in the fourth quarter from $200.5 billion in the third. Goods exports increased to $304.3 billion from $297.1 billion. The increase was largely accounted for by increases in nonagricultural industrial supplies and materials and in capital goods. Goods imports increased to $512.3 billion from $497.7 billion. The increase was more than accounted for by a large increase in petroleum and products. Nonpetroleum products decreased as a result of decreases in nonpetroleum industrial supplies and materials and in automotive vehicles, parts, and engines. Services The surplus on services increased to $30.2 billion in the fourth quarter from $28.0 billion in the third. Services receipts increased to $128.0 billion from $122.6 billion. The increase was largely accounted for by increases in “other” private services (such as business, professional, and technical services, insurance services, and financial services), in travel, and in “other” transportation (such as freight and port services). Services payments increased to $97.8 billion from $94.6 billion. The largest increase was in “other” private services. All other services categories also increased. Income The surplus on income increased to $33.0 billion in the fourth quarter from $21.3 billion in the third. Investment income Income receipts on U.S.-owned assets abroad decreased to $203.5 billion from $205.7 billion. A decrease in “other” private receipts (which consists of interest and dividends) was partly offset by an increase in direct investment receipts. Income payments on foreign-owned assets in the United States decreased to $168.8 billion from $182.6 billion. The decrease was more than accounted for by decreases in direct investment payments and, to a lesser extent, in “other” private payments (which consists of interest and dividends). U.S. Government payments (which consists of interest) increased. Compensation of employees Receipts for compensation of U.S. workers abroad were nearly unchanged at $0.8 billion, and payments for compensation of foreign workers in the United States edged up to $2.5 billion. Unilateral current transfers Net unilateral current transfers to foreigners were $28.1 billion in the fourth quarter, up from $26.2 billion in the third. The increase was more than accounted for by an increase in U.S. Government grants. Capital Account Net capital account payments (outflows) were virtually unchanged at $0.6 billion in the fourth 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 $230.1 billion in the fourth quarter, up from $111.1 billion in the third. Net acquisitions by foreign residents picked up, and net acquisitions by U.S. residents slowed. U.S.-owned assets abroad U.S.-owned assets abroad increased $116.5 billion in the fourth quarter, following an increase of $174.0 billion in the third. U.S. claims on foreigners reported by U.S. banks increased $43.0 billion in the fourth quarter, following an increase of $102.5 billion in the third. Net U.S. purchases of foreign securities were $4.2 billion in the fourth quarter, down sharply from $100.2 billion in the third. Transactions in foreign stocks shifted to net U.S. sales of $9.8 billion from net U.S. purchases of $56.9 billion. Net U.S. purchases of foreign bonds were $14.0 billion, down from $43.3 billion. U.S. direct investment abroad increased $116.4 billion in the fourth quarter, following an increase of $58.7 billion in the third. The pickup was largely accounted for by a shift in net equity capital investment abroad from a decrease to an increase. In addition, net intercompany debt investment abroad decreased less in the fourth quarter than in the third, and reinvested earnings picked up. U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns decreased $70.8 billion in the fourth quarter, following a decrease of $86.8 billion in the third. U.S. official reserve assets increased less than $0.1 billion in the fourth quarter, following an increase of $0.1 billion in the third. U.S. Government assets other than official reserve assets increased $23.6 billion in the fourth quarter, following a decrease of $0.6 billion in the third. The increase resulted from reciprocal currency arrangements between the U.S. Federal Reserve System and foreign central banks. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $346.6 billion in the fourth quarter, following an increase of $276.6 billion in the third. U.S. liabilities to foreigners reported by U.S. banks increased $94.9 billion in the fourth quarter, following an increase of $68.4 billion in the third. Net foreign purchases of U.S. Treasury securities were $69.6 billion in the fourth quarter, up from $50.3 billion in the third. Transactions in U.S. securities other than U.S. Treasury securities shifted to net foreign purchases of $79.8 billion in the fourth quarter from net foreign sales of $43.1 billion in the third. Transactions in U.S. stocks shifted to net foreign purchases of $55.6 billion from net foreign sales of $19.9 billion. Transactions in U.S. corporate bonds shifted to net foreign purchases of $39.1 billion from net foreign sales of $7.0 billion. Net foreign sales of federally sponsored agency bonds were $15.0 billion, down from $16.3 billion. Foreign direct investment in the United States increased $39.9 billion in the fourth quarter, following an increase of $101.3 billion in the third. Slowdowns in net equity capital investment in the United States and, to a lesser extent, in reinvested earnings were partly offset by a pickup in net intercompany debt investment in the United States. U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns decreased $93.3 billion in the fourth quarter, following an increase of $56.1 billion in the third. Foreign official assets in the United States increased $151.2 billion in the fourth quarter, following an increase of $38.9 billion in the third. Net U.S. currency shipments to foreigners were $4.5 billion in the fourth quarter, down from $4.7 billion in the third. The statistical discrepancy--errors and omissions in recorded transactions--was a negative $56.6 billion in the fourth quarter, compared with a positive $67.0 billion in the third. In the fourth quarter, the U.S. dollar depreciated 5 percent on a trade- weighted quarterly average basis against a group of 7 major currencies. The Year 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 $738.6 billion (preliminary) in 2007 from $811.5 billion in 2006. The decrease was more than accounted for by increases in the surpluses on income and on services and a decrease in the deficit on goods. An increase in net unilateral current transfers to foreigners was partly offsetting. Goods and services The deficit on goods and services decreased to $708.5 billion in 2007 from $758.5 billion in 2006. Goods The deficit on goods decreased to $815.4 billion in 2007 from $838.3 billion in 2006. Goods exports increased to $1,149.2 billion from $1,023.1 billion. The largest increases were in nonagricultural industrial supplies and materials and in capital goods. Agricultural products, consumer goods, and automotive vehicles, parts, and engines also contributed to the increase in total exports. Goods imports increased to $1,964.6 billion from $1,861.4 billion. The increase was largely accounted for by increases in consumer goods, petroleum and products, and capital goods. Services The surplus on services increased to $106.9 billion in 2007 from $79.7 billion in 2006. Services receipts increased to $479.2 billion from $422.6 billion. More than half of the increase was accounted for by an increase in “other” private services (such as business, professional, and technical services, insurance services, and financial services). The next largest increases were in travel, royalties and license fees, and “other” transportation (such as freight and port services). Services payments increased to $372.3 billion from $342.8 billion. Nearly two-thirds of the increase was accounted for by an increase in “other” private services. The next largest increase was in travel. Income The surplus on income increased to $74.3 billion in 2007 from $36.6 billion in 2006. Investment income Income receipts on U.S.-owned assets abroad increased to $779.3 billion from $647.6 billion. The increase was mostly accounted for by an increase in “other” private receipts (which consists of interest and dividends). Direct investment receipts also increased. Income payments on foreign-owned assets in the United States increased to $698.2 billion from $604.4 billion. The increase was mostly accounted for by an increase in “other” private payments (which consists of interest and dividends). U.S. Government payments (which consists of interest) also increased. In contrast, direct investment payments decreased. Compensation of employees Receipts for compensation of U.S. workers abroad edged up to $3.0 billion from $2.9 billion, and payments for compensation of foreign workers in the United States increased to $9.7 billion from $9.4 billion. Unilateral current transfers Net unilateral current transfers to foreigners were $104.4 billion in 2007, up from $89.6 billion in 2006. The increase was almost completely accounted for by increases in private remittances and other transfers and in U.S. Government grants. Capital Account Net capital account payments (outflows) were $2.3 billion in 2007, down from $3.9 billion in 2006. 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 $657.4 billion in 2007, down from $833.2 billion in 2006. Net acquisitions by U.S. residents increased much more than net acquisitions by foreign residents. U.S.-owned assets abroad U.S.-owned assets abroad increased $1,206.3 billion in 2007, following an increase of $1,055.2 billion in 2006. U.S. claims on foreigners reported by U.S. banks increased $589.8 billion in 2007, following an increase of $454.6 billion in 2006. Net U.S. purchases of foreign securities were $273.9 billion in 2007, down from $289.4 billion in 2006. Net U.S. purchases of foreign stocks were $131.0 billion, down from $138.5 billion. Net U.S. purchases of foreign bonds were $142.9 billion, down from $150.9 billion. U.S. direct investment abroad increased $335.4 billion in 2007, following an increase of $235.4 billion in 2006. The pickup was largely accounted for by pickups in net equity capital investment abroad and, to a lesser extent, in reinvested earnings. In addition, net intercompany debt investment abroad decreased less in 2007 than in 2006. U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns decreased $15.8 billion in 2007, following an increase of $83.5 billion in 2006. U.S. official reserve assets increased $0.1 billion in 2007, following a decrease of $2.4 billion in 2006. U.S. Government assets other than official reserve assets increased $22.9 billion in 2007, following a decrease of $5.3 billion in 2006. The increase resulted from reciprocal currency arrangements between the U.S. Federal Reserve System and foreign central banks. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $1,863.7 billion in 2007, following an increase of $1,859.6 billion in 2006. U.S. liabilities to foreigners reported by U.S. banks increased $510.9 billion in 2007, following an increase of $434.4 billion in 2006. Transactions in U.S. Treasury securities shifted to net foreign purchases of $166.3 billion in 2007 from net foreign sales of $35.9 billion in 2006. Net foreign purchases of U.S. securities other than U.S. Treasury securities were $391.9 billion in 2007, down from $592.0 billion in 2006. Net foreign purchases of U.S. stocks were $183.4 billion, up from $142.8 billion. Net foreign purchases of U.S. corporate bonds were $246.7 billion, down from $412.3 billion. Transactions in federally sponsored agency bonds shifted to net foreign sales of $38.2 billion from net foreign purchases of $36.9 billion. Foreign direct investment in the United States increased $204.4 billion in 2007, following an increase of $180.6 billion in 2006. The pickup was more than accounted for by a pickup in net equity capital investment in the United States. In contrast, net intercompany debt investment in the United States shifted from an increase to a decrease, and reinvested earnings slowed. U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns increased $166.6 billion in 2007, following an increase of $235.8 billion in 2006. Foreign official assets in the United States increased $412.7 billion in 2007, following an increase of $440.3 billion in 2006. Net U.S. currency shipments to foreigners were $10.9 billion in 2007, down from $12.6 billion in 2006. The statistical discrepancy--errors and omissions in recorded transactions--was a positive $83.6 billion in 2007, compared with a negative $17.8 billion in 2006. In 2007, the U.S. dollar depreciated 6 percent on a trade-weighted yearly average basis against a group of 7 major currencies. Revisions The first three quarters of 2007 were revised to reflect revised seasonal adjustments and, for the third quarter, receipt of new or revised data. Revisions to the first and second quarters were small. In the third quarter, the current-account deficit was revised to $177.4 billion from $178.5 billion. The goods deficit was revised to $200.5 billion from $199.7 billion; the services surplus was revised to $28.0 billion from $26.5 billion; the surplus on income was revised to $21.3 billion from $20.5 billion; and net unilateral current transfers to foreigners were revised to $26.2 billion from $25.8 billion. Net financial inflows were revised to $111.1 billion from $93.4 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. March 17, 2008 Table 1. U.S. International Transactions [Millions of dollars, quarters seasonally adjusted] Change: 2006 2007 Change: (Credits +, debits -) 2006 2007 p 2006-2007 2007 IV I r II r III r IV p III-IV Current account 1 Exports of goods and services and income receipts.......................... 2,096,165 2,410,587 314,422 550,649 557,146 590,756 626,130 636,554 10,424 2 Exports of goods and services........................................... 1,445,703 1,628,358 182,655 377,623 380,995 395,362 419,701 432,298 12,597 3 Goods, balance of payments basis.................................... 1,023,109 1,149,208 126,099 266,486 269,289 278,511 297,118 304,290 7,172 4 Services............................................................ 422,594 479,150 56,556 111,137 111,706 116,851 122,583 128,009 5,426 5 Transfers under U.S. military agency sales contracts............ 17,112 15,706 -1,406 4,291 4,259 3,950 3,837 3,661 -176 6 Travel.......................................................... 85,694 97,097 11,403 22,110 21,877 23,164 25,211 26,845 1,634 7 Passenger fares................................................. 22,187 25,329 3,142 5,765 5,772 6,132 6,550 6,874 324 8 Other transportation............................................ 46,297 51,854 5,557 11,789 12,144 12,677 13,084 13,949 865 9 Royalties and license fees...................................... 62,378 71,345 8,967 16,444 16,645 17,569 18,384 18,747 363 10 Other private services.......................................... 187,771 216,609 28,838 50,441 50,713 53,072 55,209 57,615 2,406 11 U.S. Government miscellaneous services.......................... 1,155 1,210 55 297 296 288 309 318 9 12 Income receipts......................................................... 650,462 782,229 131,767 173,025 176,151 195,394 206,428 204,256 -2,172 13 Income receipts on U.S.-owned assets abroad......................... 647,582 779,267 131,685 172,305 175,422 194,659 205,684 203,502 -2,182 14 Direct investment receipts...................................... 310,224 352,636 42,412 80,846 79,422 87,075 91,928 94,211 2,283 15 Other private receipts.......................................... 334,958 424,433 89,475 90,830 95,467 106,981 113,231 108,754 -4,477 16 U.S. Government receipts........................................ 2,400 2,198 -202 629 533 603 525 537 12 17 Compensation of employees........................................... 2,880 2,962 82 720 729 735 744 754 10 18 Imports of goods and services and income payments.......................... -2,818,047 -3,044,786 -226,739 -717,914 -728,338 -757,645 -777,362 -781,438 -4,076 19 Imports of goods and services........................................... -2,204,225 -2,336,873 -132,648 -554,549 -559,615 -574,834 -592,271 -610,152 -17,881 20 Goods, balance of payments basis.................................... -1,861,380 -1,964,577 -103,197 -466,825 -471,001 -483,570 -497,665 -512,341 -14,676 21 Services............................................................ -342,845 -372,296 -29,451 -87,724 -88,614 -91,264 -94,606 -97,811 -3,205 22 Direct defense expenditures..................................... -31,054 -32,811 -1,757 -7,601 -7,924 -8,091 -8,136 -8,660 -524 23 Travel.......................................................... -72,029 -76,426 -4,397 -18,355 -18,603 -18,789 -19,344 -19,690 -346 24 Passenger fares................................................. -27,503 -28,574 -1,071 -6,939 -6,769 -6,921 -7,298 -7,586 -288 25 Other transportation............................................ -65,282 -67,094 -1,812 -16,365 -16,381 -16,572 -16,874 -17,267 -393 26 Royalties and license fees...................................... -26,432 -27,924 -1,492 -6,636 -6,810 -6,898 -7,015 -7,201 -186 27 Other private services.......................................... -116,524 -135,285 -18,761 -30,841 -31,111 -32,975 -34,870 -36,328 -1,458 28 U.S. Government miscellaneous services.......................... -4,021 -4,182 -161 -987 -1,016 -1,018 -1,069 -1,079 -10 29 Income payments......................................................... -613,823 -707,913 -94,090 -163,365 -168,723 -182,811 -185,091 -171,287 13,804 30 Income payments on foreign-owned assets in the United States........ -604,410 -698,202 -93,792 -160,977 -166,405 -180,390 -182,647 -168,760 13,887 31 Direct investment payments...................................... -136,010 -129,034 6,976 -33,772 -31,701 -36,766 -35,846 -24,721 11,125 32 Other private payments.......................................... -334,645 -411,924 -77,279 -91,171 -97,066 -104,146 -107,075 -103,637 3,438 33 U.S. Government payments........................................ -133,755 -157,244 -23,489 -36,034 -37,638 -39,478 -39,726 -40,402 -676 34 Compensation of employees........................................... -9,412 -9,711 -299 -2,388 -2,318 -2,421 -2,444 -2,527 -83 35 Unilateral current transfers, net.......................................... -89,595 -104,438 -14,843 -20,673 -27,009 -23,169 -26,211 -28,052 -1,841 36 U.S. Government grants.................................................. -27,142 -32,699 -5,557 -6,504 -10,372 -5,439 -6,985 -9,903 -2,918 37 U.S. Government pensions and other transfers............................ -6,508 -6,835 -327 -1,647 -1,700 -1,731 -1,719 -1,686 33 38 Private remittances and other transfers................................. -55,945 -64,904 -8,959 -12,522 -14,937 -15,999 -17,507 -16,463 1,044 March 17, 2008 Table 1. U.S. International Transactions (Continued) [Millions of dollars, quarters seasonally adjusted] Change: 2006 2007 Change: (Credits +, debits -) 2006 2007 p 2006-2007 2007 IV I r II r III r IV p III-IV Capital account 39 Capital account transactions, net.......................................... -3,913 -2,317 1,596 -637 -559 -598 -609 -552 57 Financial account 40 U.S.-owned assets abroad, excluding financial derivatives (increase/financial outflow (-))....................................... -1,055,176 -1,206,332 -151,156 -289,028 -449,933 -465,907 -174,027 -116,464 57,563 41 U.S. official reserve assets............................................ 2,374 -122 -2,496 1,415 -72 26 -54 -22 32 42 Gold................................................................ 0 0 0 0 0 0 0 0 0 43 Special drawing rights.............................................. -223 -154 69 -51 -43 -39 -37 -35 2 44 Reserve position in the International Monetary Fund................. 3,331 1,021 -2,310 1,678 212 294 230 285 55 45 Foreign currencies.................................................. -734 -989 -255 -212 -241 -229 -247 -272 -25 46 U.S. Government assets, other than official reserve assets.............. 5,346 -22,931 -28,277 962 445 -369 623 -23,630 -24,253 47 U.S. credits and other long-term assets............................. -2,992 -2,441 551 -507 -608 -1,348 -182 -302 -120 48 Repayments on U.S. credits and other long-term assets............... 8,329 3,450 -4,879 1,454 1,091 881 780 697 -83 49 U.S. foreign currency holdings and U.S. short-term assets........... 9 -23,940 -23,949 15 -38 98 25 -24,025 -24,050 50 U.S. private assets..................................................... -1,062,896 -1,183,278 -120,382 -291,405 -450,306 -465,565 -174,596 -92,812 81,784 51 Direct investment................................................... -235,358 -335,415 -100,057 -66,094 -81,886 -78,422 -58,671 -116,437 -57,766 52 Foreign securities.................................................. -289,422 -273,851 15,571 -117,230 -87,206 -82,203 -100,220 -4,222 95,998 53 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns........................................ -83,531 15,819 99,350 15,818 -47,830 -93,976 86,817 70,808 -16,009 54 U.S. claims reported by U.S. banks, not included elsewhere.......... -454,585 -589,831 -135,246 -123,899 -233,384 -210,964 -102,522 -42,961 59,561 55 Foreign-owned assets in the United States, excluding financial derivatives (increase/financial inflow (+))........................................ 1,859,597 1,863,697 4,100 516,029 617,724 622,851 276,555 346,567 70,012 56 Foreign official assets in the United States............................ 440,264 412,698 -27,566 85,347 152,193 70,464 38,857 151,184 112,327 57 U.S. Government securities.......................................... 380,734 231,852 -148,882 94,798 110,772 43,275 17,586 60,219 42,633 58 U.S. Treasury securities........................................ 189,181 49,900 -139,281 47,049 37,705 -13,125 -11,768 37,088 48,856 59 Other........................................................... 191,553 181,952 -9,601 47,749 73,067 56,400 29,354 23,131 -6,223 60 Other U.S. Government liabilities................................... 3,133 5,673 2,540 1,129 654 -77 995 4,101 3,106 61 U.S. liabilities reported by U.S. banks, not included elsewhere..... 22,040 108,456 86,416 -15,666 29,797 15,981 9,805 52,873 43,068 62 Other foreign official assets....................................... 34,357 66,717 32,360 5,086 10,970 11,285 10,471 33,991 23,520 63 Other foreign assets in the United States............................... 1,419,333 1,450,999 31,666 430,682 465,531 552,387 237,698 195,383 -42,315 64 Direct investment................................................... 180,580 204,414 23,834 45,570 13,028 50,129 101,342 39,915 -61,427 65 U.S. Treasury securities............................................ -35,931 166,301 202,232 22,090 44,638 1,813 50,252 69,598 19,346 66 U.S. securities other than U.S. Treasury securities................. 591,951 391,884 -200,067 132,745 112,269 242,963 -43,128 79,780 122,908 67 U.S. currency....................................................... 12,571 10,937 -1,634 8,382 -1,631 3,347 4,741 4,480 -261 68 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns........................................ 235,769 166,579 -69,190 49,612 93,624 110,172 56,094 -93,311 -149,405 69 U.S. liabilities reported by U.S. banks, not included elsewhere..... 434,393 510,884 76,491 172,283 203,603 143,963 68,397 94,921 26,524 70 Financial derivatives, net................................................. 28,762 n.a. -28,762 -1,783 14,800 -1,007 8,552 n.a. -8,552 71 Statistical discrepancy (sum of above items with sign reversed)............ -17,794 83,590 101,384 -36,643 16,170 34,719 66,972 -56,615 -123,587 Memoranda: 72 Balance on goods (lines 3 and 20).......................................... -838,271 -815,370 22,901 -200,339 -201,712 -205,059 -200,547 -208,051 -7,504 73 Balance on services (lines 4 and 21)....................................... 79,749 106,854 27,105 23,414 23,092 25,588 27,977 30,198 2,221 74 Balance on goods and services (lines 2 and 19)............................. -758,522 -708,515 50,007 -176,926 -178,620 -179,472 -172,570 -177,853 -5,283 75 Balance on income (lines 12 and 29)........................................ 36,640 74,316 37,676 9,661 7,428 12,583 21,337 32,970 11,633 76 Unilateral current transfers, net (line 35)................................ -89,595 -104,438 -14,843 -20,673 -27,009 -23,169 -26,211 -28,052 -1,841 77 Balance on current account (lines 1, 18, and 35 or lines 74, 75, and 76)... -811,477 -738,638 72,839 -187,938 -198,201 -190,058 -177,444 -172,936 4,508 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