Chronicling 100 Years of the U.S. Economy

July 2020
Volume 100, Number 7

U.S. International Investment Position

First Quarter 2020, Year 2019, and Annual Update

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This article presents the U.S. international investment position (IIP) statistics for the first quarter of 2020 and the annual update of the IIP accounts, which introduces new annual statistical detail for 2019, including changes in position resulting from financial transactions and other changes in position such as price changes, exchange-rate changes, and changes in volume and valuation n.i.e. (not included elsewhere). With this year's annual update, the Bureau of Economic Analysis (BEA) has incorporated newly available and revised source data for 2016–2019 and additional years for selected series. Beginning with statistics for 1976, BEA has reclassified certain U.S. government capital subscriptions or other contributions to international organizations from loan assets to other equity assets, a new category within other investment assets. Also, BEA updated other equity and loan assets to incorporate U.S. government transactions and positions that were not previously included.

The U.S. net international investment position—the difference between U.S. residents' foreign financial assets and liabilities—was −$12.06 trillion at the end of the first quarter of 2020 (chart 1). Assets totaled $26.77 trillion and liabilities were $38.82 trillion. At the end of the fourth quarter of 2019, the net investment position was −$11.05 trillion.

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. A negative net investment position represents a U.S. net liability to the rest of the world.

The –$1.01 trillion change in the net investment position from the fourth quarter of 2019 to the first quarter of 2020 came from net financial transactions of −$184.2 billion and net other changes in position, such as price and exchange-rate changes, of −$822.8 billion (table A).

The U.S. net international investment position was −$11.05 trillion at the end of 2019 compared to −$9.67 trillion at the end of 2018 (chart 1). The −$1.38 trillion change in the net investment position from the end of 2018 to the end of 2019 came from net financial transactions of −$395.5 billion and net other changes in position, such as price and exchange-rate changes, of −$980.5 billion (table C).

 

 

U.S. assets decreased by $2.39 trillion to a total of $26.77 trillion at the end of the first quarter, mostly reflecting decreases in portfolio investment and direct investment assets that were partly offset by increases in financial derivatives and in other investment assets (chart 2). Portfolio investment assets decreased by $2.39 trillion, to $10.99 trillion, and direct investment assets decreased by $1.82 trillion, to $6.98 trillion, reflecting sharp decreases in foreign stock prices and the depreciation of major foreign currencies against the U.S. dollar that lowered the value of these assets in dollar terms. These large changes in asset prices reflected a sudden decrease in production and earnings as global economic activity was disrupted by the COVID-19 pandemic.

Other changes in position drove the overall decrease in U.S. assets (table A).

U.S. liabilities decreased by $1.38 trillion to a total of $38.82 trillion at the end of the first quarter, mostly reflecting decreases in direct investment and portfolio investment liabilities that were partly offset by increases in financial derivatives and in other investment liabilities (chart 3). Direct investment liabilities decreased by $1.78 trillion, to $8.77 trillion, and portfolio investment liabilities decreased by $1.61 trillion, to $19.78 trillion, mostly reflecting decreases in U.S. stock prices amid the COVID-19 pandemic.

Other changes in position drove the overall decrease in U.S. liabilities (table A).

Key changes to the IIP statistics and the results of the annual update are highlighted below.

  • BEA has reclassified certain U.S. government capital subscriptions or other contributions to international organizations from loan assets to other equity assets, a new category within other investment assets. The reclassification of other equity assets results in the addition of line items in the IIP and the International Transactions Accounts for transactions and positions in other equity assets and liabilities. Also, BEA updated other equity and loan assets to incorporate U.S. government transactions and positions that were not previously included. Quarterly statistics are revised for the first quarter of 2006 to the fourth quarter of 2019. Annual statistics are revised for 1976–2019.
    • For 1976–1999, the reclassification of other equity assets from loan assets results in offsetting revisions between these two investment categories, leaving the statistics for U.S. assets and for the net IIP unchanged.
    • For 2000–2015, the statistics for U.S. assets and for the net IIP are revised up by an average of $0.8 billion annually, reflecting the incorporation of U.S. government transactions and positions that were not previously included in other equity and loan assets.
  • Revised IIP statistics for 2016–2019 reflect newly available and revised source data that impact all major categories of assets and liabilities (table B).
    • Revised statistics for direct investment positions incorporate the results of newly available and revised source data from BEA quarterly and annual direct investment surveys.
    • Revised statistics for portfolio investment positions incorporate the results of the U.S. Department of the Treasury's annual surveys “U.S. Ownership of Foreign Securities, including Selected Money Market Instruments” as of December 2018 and “Foreign-Residents' Holdings of U.S. Securities, including Selected Money Market Instruments” as of June 2019.
    • Revised statistics for financial derivatives and other investment positions (other equity, currency and deposits, loans, insurance technical reserves, and trade credit and advances) reflect revised source data mainly from the U.S. Department of the Treasury's Treasury International Capital surveys.

For information about revisions to financial transactions that impacted the IIP, see “Annual Update of the U.S. International Transactions Accounts” in this issue of the Survey of Current Business.

The U.S. net international investment position was −$11.05 trillion at the end of 2019 compared to −$9.67 trillion at the end of 2018 (table C).

U.S. assets increased by $3.92 trillion, to a total of $29.15 trillion, at the end of 2019, reflecting increases in all major categories of assets, particularly in portfolio investment and direct investment assets. Portfolio investment assets increased by $1.94 trillion, to $13.38 trillion, and direct investment assets increased by $1.35 trillion, to $8.80 trillion, driven mainly by foreign stock price increases.

Both financial transactions and other changes in position contributed to the overall increase in U.S. assets (table C).

U.S. liabilities increased by $5.30 trillion, to a total of $40.20 trillion, at the end of 2019, reflecting increases in all major categories of liabilities, particularly in portfolio investment and direct investment liabilities. Portfolio investment liabilities increased by $2.55 trillion, to $21.39 trillion, and direct investment liabilities increased by $2.15 trillion, to $10.55 trillion, driven mainly by U.S. stock price increases.

Both financial transactions and other changes in position contributed to the overall increase in U.S. liabilities (table C).