Survey of Current Business
July 2019
Volume 99, Number 7

U.S. International Transactions

First Quarter 2019

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The U.S. current-account deficit—a net measure of transactions between the United States and the rest of the world in goods, services, primary income, and secondary income—decreased to $130.4 billion (preliminary) in the first quarter of 2019 from $143.9 billion (revised) in the fourth quarter of 2018 (chart 1 and table A). The deficit was 2.5 percent of current-dollar gross domestic product in the first quarter, down from 2.8 percent in the fourth quarter.

The $13.5 billion decrease in the current-account deficit mostly reflected a decrease in the deficit on goods that was partly offset by an increase in the deficit on secondary income.

Chart 1. U.S. Current-Account Balance and Its Components, Line Chart.

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Net U.S. borrowing measured by financial-account transactions was $37.8 billion in the first quarter, a decrease from net borrowing of $161.6 billion in the fourth quarter.

Current-account highlights

  • The deficit on goods decreased $15.8 billion to $216.5 billion.
  • The surplus on services increased $0.7 billion to $62.0 billion.
  • The surplus on primary income increased $1.1 billion to $61.1 billion.
  • The deficit on secondary income increased $4.1 billion to $36.9 billion.

Capital-account highlights

There were no capital-account transactions recorded in the first quarter, following receipts of $2.7 billion in the fourth quarter. The fourth-quarter transactions reflected receipts from foreign insurance companies for losses resulting from the wildfires in California. For information on transactions associated with natural disasters, see “What are the effects of hurricanes and other disasters on the international economic accounts?

Financial-account highlights

  • Net U.S. acquisition of financial assets excluding financial derivatives increased $4.3 billion in the first quarter to $151.6 billion (chart 2).
  • Net U.S. incurrence of liabilities excluding financial derivatives decreased $118.3 billion in the first quarter to $167.9 billion.
  • Transactions in financial derivatives other than reserves reflected first-quarter net borrowing of $21.4 billion.
Chart 2. Acquisition and Financial Assets and Incurrence of Liabilities Excluding Financial Derivatives, Line Chart

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Statistical discrepancy

The statistical discrepancy was $92.6 billion in the first quarter following a statistical discrepancy of −$20.4 billion in the fourth quarter.

Exports of goods and services and income receipts increased $7.2 billion, or 0.8 percent, in the first quarter to $945.9 billion (charts 3 and 4 and table B).

  • Primary income receipts increased $5.3 billion, or 1.9 percent, to $281.8 billion, primarily reflecting increases in direct investment income and in other investment income. A decrease in portfolio investment income partly offset the increases. For more information on direct investment income, see “Effects of the 2017 Tax Cuts and Jobs Act on Components of the International Transactions Accounts.”
  • Goods exports increased $2.4 billion, or 0.6 percent, to $419.3 billion, primarily reflecting increases in automotive vehicles, parts, and engines, mostly passenger cars, and in foods, feeds, and beverages, mainly soybeans. A decrease in industrial supplies and materials partly offset the increases.
  • Services exports increased $2.3 billion, or 1.1 percent, to $209.1 billion, primarily reflecting an increase in travel (for all purposes including education), mostly personal travel.
  • Secondary income receipts decreased $2.8 billion, or 7.3 percent, to $35.6 billion, reflecting decreases in both private and U.S. government transfers.

Imports of goods and services and income payments decreased $6.3 billion, or 0.6 percent, in the first quarter to $1.08 trillion (charts 3 and 5 and table C).

  • Goods imports decreased $13.4 billion, or 2.1 percent, to $635.9 billion, primarily reflecting a decrease in industrial supplies and materials, mainly petroleum and products.
  • Primary income payments increased $4.3 billion, or 2.0 percent, to $220.7 billion, primarily reflecting an increase in direct investment income.
Chart 5. Percent Change in Imports of Goods and Services and Income Payments, Bar Chart.

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Acquisition of financial assets

  • Net U.S. acquisition of direct investment assets increased $33.8 billion to $59.5 billion (chart 6 and table D). For more information on recent transactions in direct investment assets, see “Effects of the 2017 Tax Cuts and Jobs Act on Components of the International Transactions Accounts.
  • Net U.S. acquisition of other investment assets increased $9.9 billion to $151.6 billion, reflecting an increase in net U.S. provision of loans to foreign residents that was mostly offset by a decrease in net U.S. acquisition of currency and deposits.
  • Net U.S. sales of portfolio investment assets increased $37.5 billion to $59.7 billion, reflecting net U.S. sales of foreign stocks following net U.S. purchases in the fourth quarter.

Incurrence of liabilities

  • Net U.S. incurrence of other investment liabilities decreased $148.5 billion to $70.2 billion, mostly reflecting net foreign withdrawal of deposits in the United States following a net increase in deposits in the fourth quarter.
  • Net foreign sales of U.S. portfolio investment liabilities were $7.7 billion following net foreign purchases of $14.9 billion in the fourth quarter, reflecting relatively large and nearly offsetting changes in U.S. stock and debt security transactions from the fourth to the first quarter.
  • Net U.S. incurrence of direct investment liabilities increased $52.7 billion to $105.5 billion, primarily reflecting net U.S. incurrence of debt liabilities following net U.S. repayment in the fourth quarter.
Chart 6. Transactions in Financial Assets and Liabilities Excluding Financial Derivatives, Bar Chart.

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In the international transactions accounts, income on equity, or earnings, of foreign affiliates of U.S. multinational enterprises consists of a portion that is repatriated to the parent company in the United States in the form of dividends and a portion that is reinvested in foreign affiliates. In response to the 2017 Tax Cuts and Jobs Act, which generally eliminated taxes on repatriated earnings, some U.S. multinational enterprises repatriated accumulated prior earnings of their foreign affiliates. In the first, second, and fourth quarters of 2018, the repatriation of dividends exceeded current-period earnings, resulting in negative values being recorded for reinvested earnings. In primary income in the first quarter of 2019, dividends were $100.2 billion, while reinvested earnings were $40.2 billion (chart 7 and table E). The reinvested earnings are also reflected in the net acquisition of direct investment assets in the financial account (table D).

The U.S. international transactions statistics for the first quarter of 2014 through the fourth quarter of 2018 have been updated to incorporate newly available and revised source data and updated seasonal factors (table F).

For more information, see Eric Bryda, C. Omar Kebbeh, and Ted Peck, “Annual Update of the U.S. International Transactions Accounts,” in this issue of the Survey of Current Business.