Chronicling 100 Years of the U.S. Economy

July 2020
Volume 100, Number 7

U.S. International Transactions

First Quarter 2020

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The U.S. current-account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, narrowed by $0.1 billion, or 0.1 percent, to $104.2 billion in the first quarter of 2020 (chart 1 and table A). The revised fourth-quarter deficit was $104.3 billion.

The first-quarter deficit was 1.9 percent of current-dollar gross domestic product, up less than 0.1 percentage point from the fourth quarter.

The $0.1 billion narrowing of the current-account deficit in the first quarter mainly reflected a reduced deficit on goods that was largely offset by a reduced surplus on primary income and an expanded deficit on secondary income.

Exports of goods and services to, and income received from, foreign residents decreased $47.5 billion to $902.3 billion in the first quarter (charts 2 and 3 and tables A and B). Imports of goods and services from, and income paid to, foreign residents decreased $47.7 billion to $1.01 trillion (charts 2 and 4 and tables A and C).

Trade in goods

Exports of goods decreased $8.4 billion to $403.0 billion, mostly reflecting decreases in capital goods, mainly civilian aircraft, and in consumer goods, mainly jewelry and collectibles. Imports of goods decreased $18.6 billion to $595.3 billion, mostly reflecting decreases in consumer goods, mainly cell phones and other household goods, and in capital goods, mainly computers, telecommunications equipment, and other industrial machinery.

Trade in services

Exports of services decreased $11.7 billion to $209.4 billion, and imports of services decreased $12.2 billion to $136.1 billion. The decreases in both exports and imports mainly reflected decreases in travel, primarily other personal travel, and in transport, primarily air passenger transport.

Primary income

Receipts of primary income decreased $27.8 billion to $255.1 billion, and payments of primary income decreased $18.3 billion to $202.7 billion. The decreases in both receipts and payments mostly reflected decreases in direct investment income, mainly earnings.

Secondary income

Receipts of secondary income increased $0.3 billion to $34.8 billion, and payments of secondary income increased $1.5 billion to $72.4 billion. The increases in both receipts and payments mainly reflected increases in private transfers, primarily private sector fines and penalties.

Capital transfer payments increased $0.9 billion to $3.0 billion in the first quarter, primarily reflecting an increase in investment grants (table A).

Net financial-account transactions were −$201.1 billion in the first quarter, reflecting net U.S. borrowing from foreign residents.

Financial assets

First-quarter transactions increased U.S. residents' foreign financial assets by $722.7 billion (charts 5 and 6 and table D). Transactions increased portfolio investment assets by $144.7 billion, resulting from large and partly offsetting transactions in equity securities and debt securities, and other investment assets, mostly currency and deposits, by $614.6 billion. Transactions in deposits included $353.9 billion in foreign currency acquired by the Federal Reserve System from central bank liquidity swaps with foreign central banks. Transactions decreased direct investment assets, mostly debt instruments, by $36.3 billion, and reserve assets by $0.2 billion.

Liabilities

First-quarter transactions increased U.S. liabilities to foreign residents by $902.0 billion. Transactions increased direct investment liabilities, mainly equity, by $47.8 billion; portfolio investment liabilities by $21.3 billion, resulting from large and mostly offsetting transactions in equity securities and debt securities; and other investment liabilities, mostly currency and deposits and loans, by $832.9 billion. Transactions in deposits included $387.3 billion in interbank deposits received by the U.S. branches of foreign banks from affiliated foreign banks. These were mainly the U.S. dollars that foreign central banks obtained through the swaps described in the assets section above, which they then lent to foreign banks.

Financial derivatives

Net transactions in financial derivatives were −$21.8 billion in the first quarter, reflecting net borrowing from foreign residents.

The U.S. international transactions statistics for the first quarter of 1999 through the fourth quarter of 2019 have been updated to incorporate newly available and revised source data, improved estimation methodologies, updated seasonal adjustments, and changes in classifications and definitions (table E). In addition, table presentations for the International Transactions Accounts have been expanded to provide additional detail.

For more information, see Rudy Telles Jr., Nick Martinez, and Ted Peck, “Annual Update of the International Transactions Accounts,” in this issue of the Survey of Current Business.