FOR WIRE TRANSMISSION: 8:30 A.M. EDT, THURSDAY, September 16, 2010 Sarah Scott Thomas: (202) 606-9286 BEA 10-44 U.S. International Transactions: Second Quarter 2010 Current Account The U.S. current-account deficit—the combined balances on trade in goods and services, income, and net unilateral current transfers—increased to $123.3 billion (preliminary) in the second quarter of 2010, from $109.2 billion (revised) in the first quarter of 2010. The increase was the fourth consecutive quarterly increase since the deficit of $84.4 billion in the second quarter of 2009, which was the smallest deficit since the third quarter of 1999. The increase was more than accounted for by an increase in the deficit on goods. Increases in the surpluses on services and income and a drop in net unilateral current transfers were partly offsetting. Goods and services The deficit on goods and services increased to $131.6 billion in the second quarter from $114.5 billion in the first. Goods The deficit on goods increased to $169.6 billion in the second quarter from $151.3 billion in the first. Goods exports increased to $316.1 billion from $305.6 billion. Most major end-use categories increased in the second quarter. Industrial supplies and materials and capital goods more than accounted for the increase in exports. Within the industrial supplies and materials category, petroleum and products accounted for much of the increase, with metals and nonmetallic products also contributing to the gain. A decrease in foods, feeds, and beverages, primarily soybeans, offset some of the other gains in exports. Goods imports increased to $485.7 billion from $457.0 billion. Most major end-use categories increased; most of the increase was accounted for by capital goods, automotive products, and consumer goods. Within capital goods, computers were particularly strong. The increase in automotive products was mostly accounted for by passenger cars. Consumer goods increased as a result of pickups in both durable and nondurable goods. Services The surplus on services increased to $38.0 billion in the second quarter from $36.9 billion in the first. Services receipts increased to $135.9 billion from $133.3 billion. Within services, the largest increases were in other private services, royalties and license fees, and passenger fares. Most of the other services categories also increased. Services payments increased to $97.9 billion from $96.4 billion. The increase was more than accounted for by other transportation and other private services. Decreases in travel and royalties and license fees were partly offsetting. Income The surplus on income increased to $41.2 billion in the second quarter from $40.2 billion in the first. Investment income Income receipts on U.S.-owned assets abroad increased to $161.1 billion from $160.5 billion. The increase was more than accounted for by other private receipts (which consists of interest and dividends). Direct investment receipts and U.S. government receipts declined. Income payments on foreign-owned assets in the United States declined to $117.8 billion from $118.3 billion. The decrease was more than accounted for by direct investment payments. Other private payments (which consists of interest and dividends) and U.S. government payments increased. Compensation of employees Receipts for compensation of U.S. workers abroad remained at $0.8 billion in the second quarter. Payments for compensation of foreign workers in the United States increased to $2.9 billion from $2.8 billion. Unilateral current transfers Net unilateral current transfers to foreigners were $32.9 billion in the second quarter, down from $34.9 billion in the first. The decrease was more than accounted for by U.S. government grants. Capital Account Net capital account payments (outflows) remained close to zero for the second consecutive quarter. Financial Account Net financial inflows were $36.6 billion in the second quarter, up from $34.7 billion in the first. Growth in both U.S.-owned assets abroad and foreign- owned assets in the United States slowed, but the slowdown in U.S.-owned assets abroad exceeded that of foreign-owned assets in the United States. U.S.-owned assets abroad U.S.-owned assets abroad increased $139.1 billion in the second quarter, following an increase of $301.4 billion in the first. U.S. claims on foreigners reported by U.S. banks and securities brokers increased $16.5 billion in the second quarter, following an increase of $171.8 billion in the first. (Examples of these claims are U.S. banks’ deposits at foreign banks and U.S. banks’ loans to foreigners.) Net U.S. purchases of foreign securities were $20.7 billion in the second quarter following net U.S. purchases of $46.1 billion in the first. Net U.S. purchases of foreign stocks increased to $22.2 billion from $10.8 billion. Transactions in foreign bonds shifted to net U.S. sales of $1.5 billion from net U.S. purchases of $35.4 billion. U.S. direct investment abroad was $81.5 billion in the second quarter, down from $102.9 billion in the first. The decrease in direct investment was mostly accounted for by a decrease in net equity investment; reinvested earnings also contributed. U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns increased $17.9 billion in the second quarter, following a decrease of $10.8 billion in the first. U.S. official reserve assets increased $0.2 billion in the second quarter, following an increase of $0.8 billion in the first. U.S. government assets other than official reserve assets increased $2.4 billion in the second quarter, following a decrease of $9.4 billion in the first. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $175.6 billion in the second quarter, following an increase of $320.2 billion in the first. U.S. liabilities to foreigners reported by U.S. banks and securities brokers (other than foreign official assets) decreased $12.0 billion in the second quarter, following an increase of $63.8 billion in the first. (Examples of these liabilities are deposits of foreign residents at banks in the United States and loans by banks abroad to banks in the United States.) Net private foreign purchases of U.S. Treasury securities were $99.0 billion in the second quarter, down from $103.1 billion in the first. Net private foreign transactions in U.S. securities other than U.S. Treasury securities shifted to net foreign sales of $5.7 billion in the second quarter from net foreign purchases of $6.1 billion in the first. Transactions in U.S. federally sponsored agency bonds shifted to net foreign purchases of $8.1 billion in the second quarter, from net sales of $1.5 billion in the first. Net foreign sales of U.S. corporate bonds were $18.1 billion, down from $28.1 billion. Net foreign purchases of U.S. stocks were $4.2 billion, down from $35.6 billion. Foreign direct investment in the United States was $27.2 billion in the second quarter, following investment of $51.6 billion in the first. The decrease was more than accounted for by a shift in net intercompany debt investment in the United States to net outflows from net inflows. In contrast, equity investment and reinvested earnings both increased. U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns increased $15.4 billion in the second quarter, following an increase of $20.9 billion in the first. Foreign official assets in the United States increased $49.6 billion in the second quarter, following an increase of $72.5 billion in the first. Net shipments of U.S. currency to foreign countries were $2.1 billion in the second quarter, down from $2.3 billion in the first. The statistical discrepancy—errors and omissions in recorded transactions—was $86.7 billion in the second quarter compared to $74.5 billion in the first. In the second quarter, the U.S. dollar appreciated 3.7 percent on a trade- weighted quarterly average basis against a group of 7 major currencies. Revisions The first-quarter 2010 international transactions are revised from previously published statistics. The current-account deficit was revised to $109.2 billion from $109.0 billion. The goods deficit was virtually unrevised at $151.3 billion; the services surplus was revised to $36.9 billion from $36.0 billion; the income surplus was revised to $40.2 billion from $41.7 billion; and unilateral current transfers were revised to net outflows of $34.9 billion from $35.5 billion. Net financial inflows were revised to $34.7 billion from $31.3 billion. * * * Release dates in 2010: Fourth quarter and year 2009...................March 18, 2010 (Thursday) First quarter 2010..............................June 17, 2010 (Thursday) Second quarter 2010........................September 16, 2010 (Thursday) Third quarter 2010..........................December 16, 2010 (Thursday) * * * Summary BEA statistics 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 statistics; 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. September 16, 2010 Table 1. U.S. International Transactions [Millions of dollars, quarters seasonally adjusted] 2009 2010 Change: (Credits +, debits -) 2009 2010:I - I II III IV I r II p 2010:II Current account 1 Exports of goods and services and income receipts................................... 2,159,000 521,735 520,110 540,729 576,426 600,182 613,859 13,677 2 Exports of goods and services.................................................... 1,570,797 378,378 377,829 394,145 420,444 438,914 451,977 13,063 3 Goods, balance of payments basis............................................. 1,068,499 255,044 254,021 268,858 290,576 305,640 316,112 10,472 4 Services..................................................................... 502,298 123,334 123,808 125,287 129,868 133,274 135,865 2,591 5 Transfers under U.S. military agency sales contracts..................... 17,096 3,381 4,561 5,445 3,709 4,242 4,506 264 6 Travel................................................................... 93,917 23,631 23,006 23,311 23,969 25,006 25,298 292 7 Passenger fares.......................................................... 26,424 7,035 6,534 6,498 6,356 7,167 7,694 527 8 Other transportation..................................................... 35,406 8,652 8,549 8,834 9,371 9,691 9,998 307 9 Royalties and license fees............................................... 89,791 21,502 22,363 21,396 24,530 24,138 24,672 534 10 Other private services................................................... 238,332 58,831 58,487 59,458 61,555 62,576 63,379 803 11 U.S. government miscellaneous services................................... 1,333 302 309 345 377 454 318 -136 12 Income receipts.................................................................. 588,203 143,356 142,281 146,584 155,982 161,268 161,883 615 13 Income receipts on U.S.-owned assets abroad.................................. 585,256 142,618 141,543 145,855 155,239 160,509 161,104 595 14 Direct investment receipts............................................... 346,073 75,363 82,354 89,626 98,730 104,130 103,224 -906 15 Other private receipts................................................... 234,458 64,788 58,080 55,506 56,084 55,981 57,557 1,576 16 U.S. government receipts................................................. 4,724 2,467 1,109 723 425 398 323 -75 17 Compensation of employees.................................................... 2,947 738 738 728 743 759 779 20 18 Imports of goods and services and income payments................................... -2,412,489 -587,564 -574,265 -604,594 -646,066 -674,473 -704,274 -29,801 19 Imports of goods and services.................................................... -1,945,705 -468,817 -458,270 -493,467 -525,152 -553,365 -583,577 -30,212 20 Goods, balance of payments basis............................................. -1,575,443 -376,241 -367,528 -400,977 -430,698 -456,961 -485,725 -28,764 21 Services..................................................................... -370,262 -92,576 -90,742 -92,490 -94,454 -96,404 -97,852 -1,448 22 Direct defense expenditures.............................................. -30,474 -7,395 -7,662 -7,728 -7,689 -7,721 -7,726 -5 23 Travel................................................................... -73,230 -18,702 -17,721 -18,459 -18,348 -18,651 -18,296 355 24 Passenger fares.......................................................... -25,980 -6,784 -6,163 -6,455 -6,578 -6,638 -7,045 -407 25 Other transportation..................................................... -41,586 -11,295 -10,141 -9,880 -10,269 -11,287 -12,404 -1,117 26 Royalties and license fees............................................... -25,230 -5,988 -6,442 -6,137 -6,663 -7,662 -7,312 350 27 Other private services................................................... -168,892 -41,274 -41,461 -42,611 -43,546 -43,250 -43,861 -611 28 U.S. government miscellaneous services................................... -4,871 -1,138 -1,152 -1,220 -1,360 -1,194 -1,208 -14 29 Income payments.................................................................. -466,783 -118,747 -115,995 -111,127 -120,914 -121,108 -120,697 411 30 Income payments on foreign-owned assets in the United States................. -456,027 -116,032 -113,323 -108,460 -118,212 -118,304 -117,833 471 31 Direct investment payments............................................... -94,010 -13,663 -22,810 -23,348 -34,189 -35,143 -32,280 2,863 32 Other private payments................................................... -218,020 -63,460 -54,146 -50,473 -49,941 -48,426 -49,925 -1,499 33 U.S. government payments................................................. -143,997 -38,909 -36,367 -34,639 -34,082 -34,735 -35,628 -893 34 Compensation of employees.................................................... -10,757 -2,715 -2,673 -2,667 -2,702 -2,804 -2,865 -61 35 Unilateral current transfers, net................................................... -124,943 -29,747 -30,292 -33,638 -31,268 -34,867 -32,868 1,999 36 U.S. government grants........................................................... -41,638 -8,641 -10,969 -13,067 -8,962 -12,311 -10,112 2,199 37 U.S. government pensions and other transfers..................................... -8,874 -2,180 -2,222 -2,233 -2,241 -2,548 -2,585 -37 38 Private remittances and other transfers.......................................... -74,431 -18,927 -17,101 -18,338 -20,065 -20,008 -20,170 -162 September 16, 2010 Table 1. U.S. International Transactions (Continued) [Millions of dollars, quarters seasonally adjusted] 2009 2010 Change: (Credits +, debits -) 2009 2010:I - I II III IV I r II p 2010:II Capital account 39 Capital account transactions, net................................................... -140 -20 -29 -36 -56 -3 -1 2 Financial account 40 U.S.-owned assets abroad, excluding financial derivatives (increase/financial outflow (-))................................................ -140,465 112,726 31,734 -276,241 -8,685 -301,389 -139,056 162,333 41 U.S. official reserve assets..................................................... -52,256 -982 -3,632 -49,021 1,379 -773 -165 608 42 Gold......................................................................... 0 0 0 0 0 0 0 0 43 Special drawing rights....................................................... -48,230 -15 -8 -47,720 -487 -7 -6 1 44 Reserve position in the International Monetary Fund.......................... -3,357 -754 -3,485 -1,098 1,980 -581 -77 504 45 Foreign currencies........................................................... -669 -213 -139 -203 -114 -185 -82 103 46 U.S. government assets, other than official reserve assets....................... 541,342 244,102 193,750 57,736 45,754 9,433 -2,352 -11,785 47 U.S. credits and other long-term assets...................................... -4,069 -240 -1,947 -616 -1,266 -1,247 -1,709 -462 48 Repayments on U.S. credits and other long-term assets........................ 2,133 484 432 534 683 399 662 263 49 U.S. foreign currency holdings and U.S. short-term assets.................... 543,278 243,858 195,265 57,818 46,337 10,281 -1,305 -11,586 50 U.S. private assets.............................................................. -629,552 -130,394 -158,384 -284,956 -55,817 -310,048 -136,539 173,509 51 Direct investment............................................................ -268,680 -45,145 -62,066 -78,313 -83,155 -102,940 -81,476 21,464 52 Foreign securities........................................................... -208,213 -29,176 -86,725 -46,823 -45,489 -46,147 -20,665 25,482 53 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.. 124,428 2,717 22,161 83,302 16,248 10,821 -17,905 -28,726 54 U.S. claims reported by U.S. banks and securities brokers.................... -277,087 -58,790 -31,754 -243,122 56,579 -171,782 -16,493 155,289 55 Foreign-owned assets in the United States, excluding financial derivatives (increase/financial inflow (+))................................................. 305,736 -111,916 -28,348 342,385 103,615 320,217 175,642 -144,575 56 Foreign official assets in the United States..................................... 450,030 107,912 128,667 96,616 116,835 72,507 49,645 -22,862 57 U.S. government securities................................................... 441,056 145,512 120,776 73,293 101,475 83,384 44,168 -39,216 58 U.S. Treasury securities................................................. 561,125 163,809 149,213 123,675 124,428 89,654 24,549 -65,105 59 Other.................................................................... -120,069 -18,297 -28,437 -50,382 -22,953 -6,270 19,619 25,889 60 Other U.S. government liabilities............................................ 57,971 2,534 685 53,455 1,297 4,060 2,515 -1,545 61 U.S. liabilities reported by U.S. banks and securities brokers............... -70,851 -44,928 -4,900 -33,735 12,712 -15,968 3,612 19,580 62 Other foreign official assets................................................ 21,854 4,794 12,106 3,603 1,351 1,031 -650 -1,681 63 Other foreign assets in the United States........................................ -144,294 -219,828 -157,015 245,769 -13,220 247,710 125,997 -121,713 64 Direct investment............................................................ 134,707 5,866 31,524 55,803 41,514 51,568 27,176 -24,392 65 U.S. Treasury securities..................................................... 22,781 46,084 -29,321 -9,203 15,221 103,092 99,026 -4,066 66 U.S. securities other than U.S. Treasury securities.......................... 59 -67,781 -221 47,708 20,353 6,077 -5,723 -11,800 67 U.S. currency................................................................ 12,632 11,816 -1,935 4,179 -1,428 2,265 2,100 -165 68 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns -1,460 -11,614 26,564 8,572 -24,982 20,877 15,368 -5,509 69 U.S. liabilities reported by U.S. banks and securities brokers............... -313,013 -204,199 -183,626 138,710 -63,898 63,831 -11,950 -75,781 70 Financial derivatives, net.......................................................... 50,804 7,221 11,275 11,496 20,812 15,838 n.a. n.a. 71 Statistical discrepancy (sum of above items with sign reversed)..................... 162,497 87,565 69,815 19,899 -14,779 74,494 /1/ 86,697 /2/ 12,203 Memoranda: 72 Balance on goods (lines 3 and 20)................................................... -506,944 -121,197 -113,507 -132,119 -140,121 -151,321 -169,613 -18,292 73 Balance on services (lines 4 and 21)................................................ 132,036 30,758 33,066 32,797 35,414 36,870 38,013 1,143 74 Balance on goods and services (lines 2 and 19)...................................... -374,908 -90,439 -80,441 -99,322 -104,707 -114,451 -131,600 -17,149 75 Balance on income (lines 12 and 29)................................................. 121,419 24,609 26,286 35,457 35,068 40,160 41,185 1,025 76 Unilateral current transfers, net (line 35)......................................... -124,943 -29,747 -30,292 -33,638 -31,268 -34,867 -32,868 1,999 77 Balance on current account (lines 1, 18, and 35 or lines 74, 75, and 76)............ -378,432 -95,577 -84,447 -97,503 -100,907 -109,158 -123,283 -14,125 78 Net financial flows (lines 40, 55, and 70).......................................... 216,075 8,031 14,661 77,640 115,742 34,666 /1/ 36,586 /2/ 1,920 1 Calculated excluding financial derivatives, net (line 70). 2 The change shown here is calculated as the change from the prior period, not as the sum of changes in the above items. 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