Survey of Current Business
October 2018
Volume 98, Number 10

U.S. Net International Investment Position

Second Quarter 2018

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The U.S. net international investment position—the value of U.S. assets less the value of U.S. liabilities—decreased to −$8,638.5 billion (preliminary) at the end of the second quarter of 2018 from −$7,747.3 billion (revised) at the end of the first quarter (chart 1). The $891.2 billion decrease in the net investment position reflected net financial transactions of −$126.0 billion and net other changes in position, such as price and exchange-rate changes, of −$765.1 billion (table A).

The U.S. international investment position is a statistical balance sheet that presents the dollar value of U.S. external financial assets and liabilities at a specific point in time. The negative net investment position represents a U.S. net liability to the rest of the world.

Highlights

  • The net investment position decreased 11.5 percent in the second quarter, compared with a decrease of 0.3 percent in the first quarter and an average quarterly decrease of 4.6 percent from the first quarter of 2011 through the fourth quarter of 2017.
  • U.S. assets decreased $587.8 billion to $27,063.6 billion, reflecting decreases in all major categories of assets, led by portfolio investment assets.
  • U.S. liabilities increased $303.4 billion to $35,702.1 billion, reflecting increases in all major categories of liabilities, except financial derivatives.

U.S. assets decreased $587.8 billion to $27,063.6 billion at the end of the second quarter, reflecting decreases in all major categories of assets, led by portfolio investment assets (table A, chart 2).

  • Assets excluding financial derivatives decreased $575.2 billion to $25,485.2 billion. The decrease resulted from financial transactions of −$163.6 billion and other changes in position of −$411.6 billion.
    • Financial transactions were driven by net U.S. liquidation of other investment assets, mostly reflecting net foreign repayment of loans.
    • Financial transactions also reflected net U.S. withdrawal of direct investment assets as a result of U.S. parent repatriation of previously reinvested earnings. For more information, see the box “Effects of the 2017 Tax Cuts and Jobs Act on U.S. Direct Investment Assets.”
    • Other changes in position were driven by exchange-rate changes, as major foreign currencies depreciated against the U.S. dollar, lowering the value of foreign-currency-denominated assets in dollar terms. The decrease from exchange-rate changes was partly offset by foreign equity price increases that raised the equity value of portfolio investment and direct investment assets.
  • Financial derivatives decreased $12.6 billion to $1,578.5 billion, mostly reflecting a decrease in single-currency interest rate contracts that was partly offset by an increase in foreign-exchange contracts.

U.S. liabilities increased $303.4 billion to $35,702.1 billion at the end of the second quarter, reflecting increases in all major categories of liabilities, except financial derivatives (table A, chart 3).

  • Liabilities excluding financial derivatives increased $331.0 billion to $34,186.2 billion. The increase resulted from financial transactions of −$54.6 billion and other changes in position of $385.6 billion.
    • Financial transactions were driven by net U.S. repayment of other investment liabilities, mostly reflecting net U.S. repayment of loans.
    • Other changes in position mostly reflected U.S. equity price increases that raised the equity value of direct investment and portfolio investment liabilities. These equity price increases were partly offset by decreases in prices of U.S. long-term debt securities.
  • Financial derivatives decreased $27.7 billion to $1,515.9 billion, mostly reflecting a decrease in single-currency interest rate contracts that was partly offset by an increase in foreign-exchange contracts.

The U.S. net international investment position statistics for the first quarter of 2018 have been updated to incorporate newly available and revised source data (table B).

Tables 1.1 through 3.1 accompany this article.