Chronicling 100 Years of the U.S. Economy

April 2021
Volume 101, Number 4

U.S. International Investment Position

Fourth Quarter and Year 2020

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The U.S. net international investment position—the difference between U.S. residents' foreign financial assets and liabilities—was −$14.09 trillion at the end of the fourth quarter of 2020 (chart 1). Assets totaled $32.16 trillion and liabilities were $46.25 trillion. At the end of the third quarter, the net investment position was −$13.86 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 −$227.5 billion change in the net investment position from the third quarter to the fourth quarter came from net financial transactions of −$287.1 billion and net other changes in position, such as price and exchange rate changes, of $59.6 billion (table A).

The U.S. net international investment position was −$14.09 trillion at the end of 2020, compared to −$11.05 trillion at the end of 2019 (chart 1). The −$3.04 trillion change in the net investment position from the end of 2019 to the end of 2020 came from net financial transactions of −$743.6 billion and net other changes in position, such as price and exchange rate changes, of −$2.30 trillion (table C).

 

 

U.S. assets increased by $2.64 trillion to a total of $32.16 trillion at the end of the fourth quarter, reflecting increases in all major categories of assets, particularly in portfolio investment and direct investment assets. Portfolio investment assets increased by $1.59 trillion to $14.67 trillion, and direct investment assets increased by $955.5 billion to $9.30 trillion, driven mainly by foreign stock price increases and, to a lesser extent, the appreciation of major foreign currencies against the U.S. dollar that raised the value of U.S. assets in dollar terms.

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

U.S. liabilities increased by $2.87 trillion to a total of $46.25 trillion at the end of the fourth quarter, reflecting increases in all major categories of liabilities, particularly in portfolio investment and direct investment liabilities. Portfolio investment liabilities increased by $1.64 trillion to $24.67 trillion, and direct investment liabilities increased by $1.12 trillion to $11.97 trillion, driven mainly by U.S. stock price increases that raised the value of these liabilities.

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

The U.S. international investment position statistics for the third quarter of 2020 have been updated to incorporate newly available and revised source data (table B).

The U.S. net international investment position was −$14.09 trillion at the end of 2020, compared to −$11.05 trillion at the end of 2019 (table C).

U.S. assets increased by $3.00 trillion to a total of $32.16 trillion at the end of 2020, reflecting increases in all major categories of assets, particularly in portfolio investment, financial derivatives, and direct investment assets. Portfolio investment assets increased $1.30 trillion to $14.67 trillion, and direct investment assets increased $496.9 billion to $9.30 trillion, driven mainly by the appreciation of major foreign currencies against the U.S. dollar that raised the value of U.S. assets in dollar terms and, to a lesser extent, by financial transactions. Financial derivatives increased $755.3 billion to $2.55 trillion, mostly reflecting increases in single-currency interest rate contracts.

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

U.S. liabilities increased by $6.04 trillion to a total of $46.25 trillion at the end of 2020, reflecting increases in all major categories of liabilities, particularly in portfolio investment, direct investment, and financial derivatives liabilities. Portfolio investment liabilities increased by $3.28 trillion to $24.67 trillion, and direct investment liabilities increased by $1.42 trillion to $11.97 trillion, driven mainly by U.S. stock price increases and, to a lesser extent, by financial transactions. Financial derivatives increased $782.1 billion to $2.55 trillion, mostly reflecting increases in single-currency interest rate contracts.

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