FOR WIRE TRANSMISSION: 10:00 A.M. EDT, FRIDAY, June 25, 2010 Christopher A. Gohrband: (202) 606-9564 BEA 10-32 Elena L. Nguyen: (202) 606-9555 U.S. Net International Investment Position at Yearend 2009 The U.S. net international investment position at yearend 2009 was -$2,737.8 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 2008, the U.S. net international investment position was -$3,493.9 billion (revised). The $756.0 billion change in the U.S. net investment position from yearend 2008 to yearend 2009 reflected (1) price appreciation of U.S.-held foreign stocks that surpassed the price appreciation of foreign-held U.S. stocks, (2) appreciation of most major currencies against the U.S. dollar that raised the dollar value of U.S.-owned assets abroad, and (3) “other” changes (such as changes in reporting panels and capital gains and losses from the sales of direct investment assets) that raised the value of U.S.-owned assets abroad more than the value of foreign-owned assets in the United States. The impact of these differences was partly offset by net foreign acquisitions of financial assets in the United States that exceeded net U.S. acquisitions of financial assets abroad. The following are highlights for 2009: * Foreign acquisitions of financial assets in the United States, excluding financial derivatives, were $305.7 billion in 2009, down from $454.7 billion in 2008. In 2009, foreign residents, including foreign official institutions, purchased more U.S. Treasury securities and U.S. stocks than they sold, and foreign direct investment in the United States increased. These financial inflows were partly offset by a decrease in U.S. banks’ liabilities to foreign residents and by foreign residents’ net sales of U.S. corporate and agency bonds. * U.S. acquisitions of financial assets abroad, excluding financial derivatives, were $140.5 billion in 2009, a shift from $156.1 billion in net sales of assets in 2008. In 2009, U.S. banks’ claims against foreign residents and U.S. direct investment abroad increased, and U.S. residents bought more foreign securities than they sold. These financial outflows were partly offset by a decrease in U.S. government assets resulting from the reversal of currency swaps between the U.S. Federal Reserve System and foreign central banks, and by a decrease in U.S. nonbanks’ claims against foreign residents. * U.S. holdings of financial derivatives as assets (with positive gross fair value) decreased $2,615.4 billion, and as liabilities (with negative gross fair value) decreased $2,583.7 billion.  These large changes are mainly due to decreases in U.S. claims and liabilities from interest-rate and credit- default swap contracts. Because changes to U.S. assets and liabilities are offsetting, they have little impact on the U.S. net investment position. * Price increases in most foreign stock markets raised the value of U.S. holdings of foreign stocks by a large amount. Price increases in the U.S. stock market also raised the value of foreign holdings of U.S. stocks, but by a smaller amount. In 2009, prices of financial assets such as stocks and corporate bonds rose sharply but prices of U.S. Treasury securities and agency bonds fell. * Appreciation of most major foreign currencies against the U.S. dollar from yearend 2008 to yearend 2009 raised the dollar value of U.S.-owned assets abroad, especially the value of U.S.-owned foreign stocks. U.S.-owned assets abroad decreased $865.8 billion to $18,379.1 billion. U.S. holdings of financial derivatives as assets (with positive gross fair value) decreased $2,615.4 billion to $3,512.0 billion. U.S. official reserve assets increased $110.1 billion to $403.8 billion, mostly as a result of price appreciation of U.S. gold stock and new allocations of special drawing rights to the United States by the International Monetary Fund. U.S. government assets other than official reserve assets decreased $541.3 billion to $82.8 billion, as a result of the reversal of swaps under temporary reciprocal currency arrangements between the U.S. and foreign central banks to provide dollar liquidity to foreign banks during the financial crisis. The stock of U.S. direct investment abroad at current cost increased $308.4 billion to $4,051.2 billion, mostly as a result of reinvested earnings (see box). U.S. holdings of foreign securities increased $1,485.3 billion to $5,471.0 billion, mainly due to increases in the prices of foreign stocks held by U.S. residents. Claims on foreigners reported by U.S. banks increased $387.7 billion to $4,064.1 billion. Claims on foreigners reported by U.S. nonbanks decreased $0.5 billion to $794.2 billion. Foreign-owned assets in the United States decreased $1,621.8 billion to $21,116.9 billion. U.S. holdings of financial derivatives as liabilities (with negative gross fair value) decreased $2,583.7 billion to $3,384.1 billion. Foreign official assets in the United States increased $433.8 billion to $4,373.8 billion, mostly as a result of especially strong net foreign official purchases of U.S. Treasury securities. Foreign private holdings of U.S. securities other than U.S. Treasury securities increased $666.4 billion to $5,287.2 billion, mainly due to increases in the prices of U.S. stocks held by foreign residents. The stock of foreign direct investment in the United States at current cost increased $151.4 billion to $2,672.8 billion, mostly as a result of financial inflows (see box). The stock of U.S. currency abroad increased $12.6 billion to $313.8 billion. Liabilities to private foreign residents reported by U.S. banks decreased $211.6 billion to $3,593.6 billion. Liabilities to private foreign residents reported by U.S. nonbanks decreased $66.1 billion to $665.5 billion. Foreign private holdings of U.S. Treasury securities decreased $24.7 billion to $826.2 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 Revisions to the U.S. international investment position statistics reflect the ongoing effort to modernize and enhance BEA’s international economic accounts and newly available source data. Modernization BEA is completing the implementation of the latest international guidelines on the treatment of allocations of special drawing rights (SDRs) by including the reserve-related liabilities in “other U.S. government liabilities” (table 1, line 31). As a result, the U.S. international investment position statistics are revised for 1976-2008. Permanent debt between affiliated banks, bank holding companies, and financial holding companies is reclassified from direct investment (table 1, lines 18 and 35) to U.S. claims and liabilities reported by U.S. banks and securities brokers (table 1, lines 23 and 42). Position statistics are revised for 2007 and 2008. Newly available source data for 2007 and 2008 The revised position statistics for 2007 and 2008 also reflect new data from the annual surveys of multinational companies’ operations as well as new and updated data from the quarterly surveys of direct investment, the shift of several U.S. nonbanking entities to bank holding companies at the end of 2008, the incorporation of results from the U.S. Treasury Department’s annual survey of U.S. Ownership of Foreign Securities for December 2008, and the benchmark survey of Foreign-Residents’ Holdings of U.S. Securities for June 2009. The previously published U.S. net international investment position at yearend 2008 was -$3,469.2 billion. Revisions to the U.S. net international investment position from all sources were $224.2 billion for 2007 and -$24.6 billion for 2008. A more detailed discussion of the U.S. net international investment position at yearend 2009 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. * * * 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. Table 1. International Investment Position of the United States at Yearend, 2008 and 2009 [Millions of dollars] Changes in position in 2009 Attributable to: Valuation adjustments Line Type of investment Position, Position, 2008 r Exchange- 2009 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)............................................. -3,493,882 -216,075 522,929 276,730 172,452 756,036 -2,737,846 2 Financial derivatives, net (line 5 less line 25) /3/............................................................. 159,635 -50,804 /4/ /4/ /4/19,103 -31,701 127,934 3 Net international investment position, excluding financial derivatives (line 6 less line 26)..................... -3,653,517 -165,271 522,929 276,730 153,349 787,737 -2,865,780 4 U.S.-owned assets abroad (lines 5+6)............................................................................. 19,244,875 /3/ /3/ /3/ /3/ -865,791 18,379,084 5 Financial derivatives (gross positive fair value).............................................................. 6,127,450 /3/ /3/ /3/ /3/ -2,615,443 3,512,007 6 U.S.-owned assets abroad, excluding financial derivatives (lines 7+12+17)...................................... 13,117,425 140,465 1,066,119 357,956 185,112 1,749,652 14,867,077 7 U.S. official reserve assets................................................................................... 293,732 52,256 56,941 875 0 110,072 403,804 8 Gold......................................................................................................... 227,439 0 /5/56,941 ..... /6/0 56,941 284,380 9 Special drawing rights....................................................................................... 9,340 48,230 ..... 244 0 48,474 57,814 10 Reserve position in the International Monetary Fund.......................................................... 7,683 3,357 ..... 345 0 3,702 11,385 11 Foreign currencies........................................................................................... 49,270 669 ..... 286 0 955 50,225 12 U.S. government assets, other than official reserve assets..................................................... 624,100 -541,342 ..... (*) 17 -541,325 82,775 13 U.S. credits and other long-term assets /7/.................................................................. 69,877 1,936 ..... (*) 17 1,953 71,830 14 Repayable in dollars....................................................................................... 69,604 1,936 ..... ..... 17 1,953 71,557 15 Other /8/.................................................................................................. 273 0 ..... (*) ..... 0 273 16 U.S. foreign currency holdings and U.S. short-term assets /9/................................................ 554,222 -543,278 ..... (*) ..... -543,278 10,944 17 U.S. private assets............................................................................................ 12,199,593 629,552 1,009,178 357,081 185,095 2,180,906 14,380,499 18 Direct investment at current cost............................................................................ 3,742,835 268,680 -12,201 79,124 -27,247 308,356 4,051,191 19 Foreign securities........................................................................................... 3,985,712 208,213 1,021,379 255,694 0 1,485,286 5,470,998 20 Bonds...................................................................................................... 1,237,284 144,909 84,123 27,269 0 256,301 1,493,585 21 Corporate stocks........................................................................................... 2,748,428 63,304 937,256 228,425 0 1,228,985 3,977,413 22 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.................................. 794,699 -124,428 ..... 8,404 115,550 -474 794,225 23 U.S. claims reported by U.S. banks and securities brokers, not included elsewhere............................ 3,676,347 277,087 ..... 13,859 96,792 387,738 4,064,085 24 Foreign-owned assets in the United States (lines 25+26).......................................................... 22,738,757 /3/ /3/ /3/ /3/ -1,621,827 21,116,930 25 Financial derivatives (gross negative fair value).............................................................. 5,967,815 /3/ /3/ /3/ /3/ -2,583,742 3,384,073 26 Foreign-owned assets in the Unites States, excluding financial derivatives (lines 27+34)....................... 16,770,942 305,736 543,190 81,226 31,763 961,915 17,732,857 27 Foreign official assets in the United States................................................................... 3,939,998 450,030 -13,584 219 -2,824 433,841 4,373,839 28 U.S. government securities................................................................................... 3,264,139 441,056 -104,274 ..... -8,524 328,258 3,592,397 29 U.S. Treasury securities................................................................................... 2,400,516 561,125 -92,297 ..... 1,708 470,536 2,871,052 30 Other...................................................................................................... 863,623 -120,069 -11,977 ..... -10,232 -142,278 721,345 31 Other U.S. government liabilities /10/....................................................................... 40,577 57,971 ..... 219 0 58,190 98,767 32 U.S. liabilities reported by U.S. banks and securities brokers, not included elsewhere....................... 252,608 -70,851 ..... ..... 5,700 -65,151 187,457 33 Other foreign official assets................................................................................ 382,674 21,854 90,690 ..... 0 112,544 495,218 34 Other foreign assets........................................................................................... 12,830,944 -144,294 556,774 81,007 34,587 528,074 13,359,018 35 Direct investment at current cost............................................................................ 2,521,353 134,707 -5,761 3,560 18,927 151,433 2,672,786 36 U.S. Treasury securities..................................................................................... 850,921 22,781 -47,510 ..... 0 -24,729 826,192 37 U.S. securities other than U.S. Treasury securities.......................................................... 4,620,798 59 610,045 56,261 0 666,365 5,287,163 38 Corporate and other bonds.................................................................................. 2,770,606 -136,296 150,665 56,261 0 70,630 2,841,236 39 Corporate stocks........................................................................................... 1,850,192 136,355 459,380 ..... 0 595,735 2,445,927 40 U.S. currency................................................................................................ 301,139 12,632 ..... ..... 0 12,632 313,771 41 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns............................. 731,539 -1,460 ..... 4,638 -69,240 -66,062 665,477 42 U.S. liabilities reported by U.S. banks and securities brokers, not included elsewhere....................... 3,805,194 -313,013 ..... 16,548 84,900 -211,565 3,593,629 Memoranda: 43 Direct investment abroad at market value........................................................................... 3,103,704 268,680 737,062 194,222 -817 1,199,147 4,302,851 44 Direct investment in the United States at market value............................................................. 2,552,572 134,707 422,683 ..... 10,621 568,011 3,120,583 p Preliminary r Revised * Less than $500,000 (+/-) ..... 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 due to year-to-year changes in the composition of reporting panels, primarily for bank and nonbank estimates, and to the incorporation of survey results. Also includes capital gains and losses of direct investment affiliates and changes in positions that cannot be allocated to financial flows, price changes, or exchange-rate changes. 3. Financial flows and valuation adjustments for financial derivatives are available only on a net basis, which is shown on line 2; they are not separately available for gross positive fair values and gross negative fair values of financial derivatives. Consequently, 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). 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. Includes foreign-currency-denominated assets obtained through temporary reciprocal currency arrangements between the Federal Reserve System and foreign central banks. These assets are included in the investment position at the dollar value established at the time they were received, reflecting the valuation of these assets in the Federal Reserve System’s balance sheet. The movement of exchange rates does not affect this valuation. 10. Includes U.S. government liabilities associated with military sales contracts and U.S. government reserve-related liabilities from allocations of special drawing rights (SDRs). Source: Bureau of Economic Analysis