U.S. International Transactions

By Nathan Hansen  |  Volume 99, Number 10  |  October 16, 2019

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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 $8.0 billion, or 5.9 percent, to $128.2 billion in the second quarter of 2019 (chart 1 and table A). The revised first-quarter deficit was $136.2 billion.

The deficit was 2.4 percent of current-dollar gross domestic product, down from 2.6 percent in the first quarter.

The $8.0 billion narrowing of the current-account deficit in the second quarter mainly reflected an expanded surplus on primary income.

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

[Click chart to expand]

Table A. U.S. International Transactions
[Millions of dollars, seasonally adjusted]
  2018 2019 Change 2019:I to 2019:II
III IV I r II p
Current account          
Exports of goods and services and income receipts (credits) 938,438 938,689 940,922 942,986 2,064
Exports of goods and services 626,239 623,761 626,970 622,322 −4,648
Goods 419,545 416,964 419,100 414,554 −4,546
Services 206,694 206,797 207,870 207,768 −102
Primary income receipts 273,570 276,483 278,138 285,197 7,059
Secondary income (current transfer) receipts 38,629 38,445 35,814 35,466 −348
Imports of goods and services and income payments (debits) 1,064,177 1,082,616 1,077,116 1,071,174 −5,942
Imports of goods and services 789,663 794,907 783,443 785,656 2,213
Goods 647,447 649,288 635,844 637,882 2,038
Services 142,216 145,620 147,599 147,774 175
Primary income payments 208,846 216,424 221,275 217,581 −3,694
Secondary income (current transfer) payments 65,669 71,285 72,399 67,936 −4,463
Capital account          
Capital transfer receipts and other credits 524 2,723 0 0 0
Capital transfer payments and other debits 3 2 0 n.a. n.a.
Financial account          
Net U.S. acquisition of financial assets excluding financial derivatives (net increase in assets / financial outflow (+)) 81,893 147,259 110,967 208,217 97,250
Direct investment assets 52,845 25,696 7,878 86,040 78,162
Portfolio investment assets 83,415 −22,210 −41,876 38,180 80,056
Other investment assets −54,189 141,668 144,757 81,639 −63,118
Reserve assets −177 2,105 208 2,359 2,151
Net U.S. incurrence of liabilities excluding financial derivatives (net increase in liabilities / financial inflow (+)) 127,770 286,247 126,280 354,137 227,857
Direct investment liabilities 126,925 52,720 110,079 81,182 −28,897
Portfolio investment liabilities 12,274 14,884 −42,822 167,492 210,314
Other investment liabilities −11,430 218,644 59,023 105,463 46,440
Financial derivatives other than reserves, net transactions −11,505 −22,632 −21,421 −9,220 12,201
Statistical discrepancy          
Statistical discrepancy1 67,837 −20,414 99,461 −26,951 −126,412
Balances          
Balance on current account −125,739 −143,927 −136,194 −128,188 8,006
Balance on goods and services −163,424 −171,146 −156,473 −163,334 −6,861
Balance on goods −227,902 −232,323 −216,744 −223,328 −6,584
Balance on services 64,478 61,177 60,271 59,994 −277
Balance on primary income 64,724 60,059 56,864 67,616 10,752
Balance on secondary income −27,039 −32,841 −36,585 −32,470 4,115
Balance on capital account 521 2,721 0 0 0
Net lending (+) or net borrowing (−) from current- and capital-account transactions2 −125,218 −141,206 −136,194 −128,188 8,006
Net lending (+) or net borrowing (−) from financial-account transactions3 −57,381 −161,621 −36,734 −155,140 −118,406
p
Preliminary
r
Revised
n.a.
Not available
  1. The statistical discrepancy is the difference between net acquisition of financial assets and net incurrence of liabilities in the financial account (including financial derivatives) less the difference between total credits and total debits recorded in the current and capital accounts.
  2. Sum of current- and capital-account balances.
  3. Sum of net U.S. acquisition of financial assets and net transactions in financial derivatives less net U.S. incurrence of liabilities.

Note. The statistics are presented in table 1.2 on BEA's website.

Exports of goods and services to, and income received from, foreign residents increased $2.1 billion to $943.0 billion in the second quarter (charts 2 and 3 and table B). Imports of goods and services from, and income paid to, foreign residents decreased $5.9 billion to $1.07 trillion (chart 4 and table C).

Chart 2. Current-Account Transactions

[Click chart to expand]

Trade in goods

Exports of goods decreased $4.5 billion to $414.6 billion, mainly reflecting a decrease in capital goods, mostly civilian aircraft. Imports of goods increased $2.0 billion to $637.9 billion, led by an increase in industrial supplies and materials. Changes in the other major categories were nearly offsetting.

Trade in services

Exports of services decreased $0.1 billion to $207.8 billion, reflecting nearly offsetting changes across major categories. Decreases were led by travel, mainly other personal travel, and increases were led by other business services, mainly professional and management consulting services. Imports of services increased $0.2 billion to $147.8 billion, also reflecting nearly offsetting changes across major categories. Increases were led by insurance services, mainly reinsurance, and decreases were led by transport, mostly sea freight transport.

Primary income

Receipts of primary income increased $7.1 billion to $285.2 billion, mostly reflecting increases in portfolio investment income, mainly dividends on equity securities, and in direct investment income. Within direct investment income, dividends were $88.3 billion in the second quarter and remain elevated since the passage of the 2017 Tax Cuts and Jobs Act, which generally eliminated taxes on repatriated earnings beginning in 2018. For more information, see “How do the effects of the 2017 Tax Cuts and Jobs Act appear in BEA's direct investment statistics?” Payments of primary income decreased $3.7 billion to $217.6 billion, mostly reflecting a decrease in direct investment income.

Secondary income

Receipts of secondary income decreased $0.3 billion to $35.5 billion. Payments of secondary income decreased $4.5 billion to $67.9 billion, mostly reflecting decreases in U.S. government grants and in private sector payments of fines and penalties.

Chart 3. Percent Change in Exports of Goods and Services and Income Receipts

[Click chart to expand]

Chart 4. Percent Change in Imports of Goods and Services and Income Payments

[Click chart to expand]

Table B. Exports of Goods and Services and Income Receipts
[Millions of dollars, seasonally adjusted]
  2018 2019 Change 2019:I to 2019:II
III IV I r II p
Exports of goods and services and income receipts 938,438 938,689 940,922 942,986 2,064
Exports of goods 419,545 416,964 419,100 414,554 −4,546
General merchandise 413,442 412,683 414,383 410,315 −4,068
Foods, feeds, and beverages 33,829 29,988 32,737 35,206 2,469
Industrial supplies and materials 135,990 136,077 130,689 132,798 2,109
Energy products 56,374 57,659 53,445 56,817 3,372
Of which: Petroleum and products 49,597 50,018 46,006 49,336 3,330
Nonenergy products 79,616 78,418 77,244 75,981 −1,263
Capital goods except automotive 140,316 142,219 142,068 135,685 −6,383
Automotive vehicles, parts, and engines 38,864 37,827 41,274 40,255 −1,019
Consumer goods except food and automotive 51,121 51,917 52,963 51,465 −1,498
Other general merchandise 13,323 14,655 14,651 14,907 256
Net exports of goods under merchanting 68 68 92 73 −19
Nonmonetary gold 6,034 4,214 4,625 4,165 −460
           
Exports of services1 206,694 206,797 207,870 207,768 −102
Maintenance and repair services n.i.e. 7,856 8,225 8,062 8,122 60
Transport 23,098 22,882 23,029 23,123 94
Travel (for all purposes including education) 53,013 53,297 54,256 53,423 −833
Business 9,559 9,504 9,527 9,622 95
Personal 43,455 43,793 44,729 43,801 −928
Insurance services 4,506 4,417 4,404 4,361 −43
Financial services 28,003 27,854 27,319 27,435 116
Charges for the use of intellectual property n.i.e. 31,879 31,467 31,571 31,330 −241
Telecommunications, computer, and information services 10,760 11,230 11,407 11,483 76
Other business services 42,319 42,074 42,931 43,309 378
Government goods and services n.i.e. 5,259 5,350 4,890 5,182 292
           
Primary income receipts 273,570 276,483 278,138 285,197 7,059
Investment income 271,881 274,786 276,434 283,485 7,051
Direct investment income 145,910 141,248 143,545 146,428 2,883
Portfolio investment income 102,991 107,568 103,721 107,568 3,847
Income on equity and investment fund shares 68,031 71,983 68,621 72,125 3,504
Interest on debt securities 34,961 35,586 35,100 35,443 343
Other investment income 22,750 25,783 28,935 29,240 305
Reserve asset income 230 187 231 248 17
Compensation of employees 1,689 1,697 1,704 1,712 8
Secondary income (current transfer) receipts2 38,629 38,445 35,814 35,466 −348
p
Preliminary
r
Revised
n.i.e.
Not included elsewhere
  1. See also Shari A. Allen, Thomas Anderson, Alexis N. Grimm, and Michael Mann, "Trade in Services in 2018 and Services Supplied Through Affiliates in 2017," Survey of Current Business 99 (October 2019).
  2. Secondary income receipts include U.S. government and private transfers, such as fines and penalties, withholding taxes, insurance-related transfers, and other current transfers.

Note. The statistics are presented in table 1.2, table 2.1, table 3.1, table 4.1, and table 5.1 on BEA's website.

Table C. Imports of Goods and Services and Income Payments
[Millions of dollars, seasonally adjusted]
  2018 2019 Change 2019:I to 2019:II
III IV I r II p
Imports of goods and services and income payments 1,064,177 1,082,616 1,077,116 1,071,174 −5,942
Imports of goods 647,447 649,288 635,844 637,882 2,038
General merchandise 644,988 646,669 633,933 636,107 2,174
Foods, feeds, and beverages 37,105 37,358 37,488 38,609 1,121
Industrial supplies and materials 149,999 144,308 134,257 136,566 2,309
Energy products 67,746 60,804 54,733 60,742 6,009
Of which: Petroleum and products 64,211 56,190 50,398 57,298 6,900
Nonenergy products 82,253 83,504 79,524 75,824 −3,700
Capital goods except automotive 176,328 175,102 172,328 170,702 −1,626
Automotive vehicles, parts, and engines 93,978 96,013 95,529 97,000 1,471
Consumer goods except food and automotive 161,564 166,557 167,657 165,328 −2,329
Other general merchandise 26,014 27,331 26,674 27,902 1,228
Nonmonetary gold 2,458 2,619 1,911 1,775 −136
           
Imports of services1 142,216 145,620 147,599 147,774 175
Maintenance and repair services n.i.e. 2,286 2,287 2,163 2,205 42
Transport 27,226 28,119 27,925 27,288 −637
Travel (for all purposes including education) 36,148 37,364 37,799 37,667 −132
Business 4,144 4,082 4,039 4,211 172
Personal 32,005 33,282 33,759 33,456 −303
Insurance services 10,433 11,369 11,680 11,952 272
Financial services 7,776 7,932 8,451 8,625 174
Charges for the use of intellectual property n.i.e. 13,771 14,445 14,256 14,292 36
Telecommunications, computer, and information services 10,342 10,690 10,309 10,465 156
Other business services 28,426 27,635 29,114 29,298 184
Government goods and services n.i.e. 5,808 5,779 5,903 5,984 81
           
Primary income payments 208,846 216,424 221,275 217,581 −3,694
Investment income 203,887 211,467 216,322 212,643 −3,679
Direct investment income 61,217 62,648 65,318 59,908 −5,410
Portfolio investment income 117,851 119,879 119,776 121,546 1,770
Income on equity and investment fund shares 39,186 40,874 40,849 42,656 1,807
Interest on debt securities 78,665 79,004 78,927 78,890 −37
Other investment income 24,820 28,941 31,228 31,189 −39
Compensation of employees 4,958 4,956 4,953 4,938 −15
Secondary income (current transfer) payments2 65,669 71,285 72,399 67,936 −4,463
p
Preliminary
r
Revised
n.i.e.
Not included elsewhere
  1. See also Shari A. Allen, Thomas Anderson, Alexis N. Grimm, and Michael Mann, “Trade in Services in 2018 and Services Supplied Through Affiliates in 2017,” Survey of Current Business 99 (October 2019).
  2. Secondary income payments include U.S. government and private transfers, such as U.S. government grants and pensions, fines and penalties, withholding taxes, personal transfers (remittances), insurance-related transfers, and other current transfers.

Note. The statistics are presented in table 1.2, table 2.1, table 3.1, table 4.1, and table 5.1 on BEA's website.

Net financial-account transactions were −$155.1 billion in the second quarter, reflecting net U.S. borrowing from foreign residents.

Financial assets

Second-quarter transactions increased U.S. residents' foreign financial assets by $208.2 billion (charts 5 and 6 and table D). Transactions increased direct investment assets, primarily equity, by $86.0 billion; portfolio investment assets, mainly long-term debt securities, by $38.2 billion; other investment assets, primarily currency and deposits, by $81.6 billion; and reserve assets by $2.4 billion.

Liabilities

Second-quarter transactions increased U.S. liabilities to foreign residents by $354.1 billion. Transactions increased direct investment liabilities, mostly equity, by $81.2 billion; portfolio investment liabilities, both equity and debt securities, by $167.5 billion; and other investment liabilities, mostly bank deposits, by $105.5 billion.

Financial derivatives

Net transactions in financial derivatives were −$9.2 billion in the second quarter, reflecting net borrowing from foreign residents.

Chart 5. Acquisition of Financial Assets and Incurrence of Liabilities Excluding Financial Derivatives

[Click chart to expand]

Chart 6. Transactions in Financial Assets and Liabilities Excluding Financial Derivatives

[Click chart to expand]

Table D. Net U.S. Acquisition of Financial Assets and Net U.S. Incurrence of Liabilities
[Millions of dollars, seasonally adjusted]
  2018 2019 Change 2019:I to 2019:II
III IV I r II p
Net U.S. acquisition of financial assets excluding financial derivatives (net increase in assets / financial outflow (+)) 81,893 147,259 110,967 208,217 97,250
Direct investment assets 52,845 25,696 7,878 86,040 78,162
Equity 56,999 19,875 45,969 58,506 12,537
Equity other than reinvestment of earnings 38,068 32,514 4,905 6,913 2,008
Reinvestment of earnings 18,931 −12,639 41,065 51,593 10,528
Debt instruments −4,154 5,821 −38,091 27,534 65,625
Portfolio investment assets 83,415 −22,210 −41,876 38,180 80,056
Equity and investment fund shares 31,868 31,754 −50,488 −27,939 22,549
Debt securities 51,547 −53,964 8,612 66,119 57,507
Short-term securities 20,797 −33,155 16,591 23,109 6,518
Long-term corporate securities 21,212 −14,190 −8,415 30,270 38,685
Other long-term securities 9,538 −6,619 436 12,740 12,304
Other investment assets −54,189 141,668 144,757 81,639 −63,118
Currency and deposits −22,998 68,005 12,962 61,189 48,227
Loans −29,151 71,630 133,716 21,220 −112,496
Trade credit and advances −2,040 2,033 −1,921 −770 1,151
Reserve assets −177 2,105 208 2,359 2,151
Monetary gold 0 0 0 0 0
Special drawing rights 43 47 57 60 3
Reserve position in the International Monetary Fund −288 2,049 114 2,248 2,134
Other reserve assets 68 9 38 51 13
           
Net U.S. incurrence of liabilities excluding financial derivatives (net increase in liabilities / financial inflow (+)) 127,770 286,247 126,280 354,137 227,857
Direct investment liabilities 126,925 52,720 110,079 81,182 −28,897
Equity 116,455 117,667 87,529 62,775 −24,754
Equity other than reinvestment of earnings 80,043 80,200 45,889 25,685 −20,204
Reinvestment of earnings 36,412 37,468 41,641 37,090 −4,551
Debt instruments 10,470 −64,948 22,549 18,407 −4,142
Portfolio investment liabilities 12,274 14,884 −42,822 167,492 210,314
Equity and investment fund shares −90,582 117,758 −214,949 85,496 300,445
Debt securities 102,856 −102,874 172,127 81,996 −90,131
Short term −53,228 13,045 22,022 −80,808 −102,830
Treasury bills and certificates −35,170 30,182 18,041 −59,826 −77,867
Federally sponsored agency securities −6,121 −2,082 3,901 48 −3,853
Other short-term securities −11,937 −15,055 80 −21,030 −21,110
Long term 156,085 −115,919 150,105 162,804 12,699
Treasury bonds and notes 96,764 −83,006 121,286 112,536 −8,750
Federally sponsored agency securities 19,460 16,295 10,670 18,541 7,871
Corporate bonds and notes 39,939 −47,683 17,366 33,101 15,735
Other −78 −1,525 783 −1,374 −2,157
Other investment liabilities −11,430 218,644 59,023 105,463 46,440
Currency (short term) 19,606 9,364 5,249 9,356 4,107
Deposits −26,639 95,229 −36,613 102,575 139,188
Loans −6,605 114,887 83,326 −7,172 −90,498
Trade credit and advances 2,208 −836 7,061 704 −6,357
Special drawing rights allocations 0 0 0 0 0
p
Preliminary
r
Revised

Note. The statistics are presented in table 1.2, table 6.1, table 7.1, and table 8.1 on BEA's website.

The U.S. international transactions statistics for the first quarter have been updated to incorporate newly available and revised source data (table E).

Table E. Updates to the First Quarter 2019 International Transactions Aggregates
[Millions of dollars, seasonally adjusted]
  Preliminary Estimates Revised Estimates
Balance on current account −130,403 −136,194
Balance on goods −216,525 −216,744
Balance on services 61,916 60,271
Balance on primary income 61,111 56,864
Balance on secondary income (current transfers) −36,905 −36,585
Balance on capital account 0 0
Net lending or borrowing from financial-account transactions −37,754 −36,734
Net U.S. acquisition of financial assets 151,569 110,967
Net U.S. incurrence of liabilities 167,902 126,280
Financial derivatives other than reserves, net transactions −21,421 −21,421