Chronicling 100 Years of the U.S. Economy

July 2021
Volume 101, Number 7

U.S. International Investment Position

First Quarter 2021, Annual Update, and Year 2020 (Revised)

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This article presents the U.S. international investment position (IIP) statistics for the first quarter of 2021, the annual update of the IIP Accounts, and new detail for 2020. The new annual statistical detail for 2020 includes 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 2017–2020.

The U.S. net international investment position—the difference between U.S. residents' foreign financial assets and liabilities—was −$14.32 trillion at the end of the first quarter of 2021 (chart 1). Assets totaled $32.81 trillion and liabilities were $47.13 trillion. At the end of the fourth quarter of 2020, the net investment position was −$14.01 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. A negative net investment position represents a U.S. net liability to the rest of the world.

The −$309.0 billion change in the net investment position from the fourth quarter of 2020 to the first quarter of 2021 came from net financial transactions of −$154.4 billion and net other changes in position, such as price and exchange-rate changes, of −$154.6 billion (table A).

 

 

U.S. assets increased by $555.5 billion to a total of $32.81 trillion at the end of the first quarter, mainly reflecting increases in portfolio investment and direct investment assets that were partly offset by decreases in financial derivatives (chart 2). Portfolio investment assets increased by $528.3 billion to $15.13 trillion, driven mainly by foreign stock price increases and strong U.S. net purchases of foreign securities; these increases were partly offset by the depreciation of many major foreign currencies against the U.S. dollar and by foreign bond price decreases. Direct investment assets increased by $484.7 billion to $9.89 trillion, driven by foreign stock price increases that were partly offset by the depreciation of many major foreign currencies against the U.S. dollar. Financial derivatives decreased by $386.9 billion to $2.16 trillion, mostly reflecting decreases in single-currency interest-rate contracts.

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

U.S. liabilities increased by $864.5 billion to a total of $47.13 trillion at the end of the first quarter, mainly reflecting increases in direct investment and portfolio investment liabilities that were partly offset by decreases in financial derivatives (chart 3). Direct investment liabilities increased by $593.7 billion to $12.57 trillion, driven by U.S. stock price increases. Portfolio investment liabilities increased by $552.2 billion to $25.18 trillion, driven by foreign net purchases of U.S. securities and U.S. stock price increases that were partly offset by U.S. bond price decreases. Financial derivatives decreased by $427.1 billion to $2.13 trillion, mostly reflecting decreases in single-currency interest-rate contracts.

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

The U.S. net international investment position statistics for 2017–2020 have been updated to incorporate newly available and revised source data. Key changes to the statistics are highlighted below, and the results are shown in table B.

  • Revised statistics for direct investment positions incorporate the results of BEA's 2017 Benchmark Survey of Foreign Direct Investment in the United States.
  • 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 2019 and “Foreign-Residents' Holdings of U.S. Securities, including Selected Money Market Instruments” as of June 2020.
  • 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 −$14.01 trillion at the end of 2020, compared with −$11.23 trillion at the end of 2019 (table C). The −$2.78 trillion change in the net investment position from the end of 2019 to the end of 2020 came from net financial transactions of −$653.0 billion and net other changes in position, such as price and exchange rate changes, of −$2.13 trillion (table C).

U.S. assets increased by $3.15 trillion to a total of $32.26 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 by $1.24 trillion to $14.61 trillion and direct investment assets increased by $702.9 billion to $9.41 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 by $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 $5.93 trillion to a total of $46.27 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 $3.06 trillion to $24.63 trillion and direct investment liabilities increased by $1.49 trillion to $11.98 trillion, driven mainly by U.S. stock price increases and, to a lesser extent, by financial transactions. Financial derivatives increased by $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).