U.S. International Transactions

Second Quarter 2020

By Rudy Telles Jr.  |  Volume 100, Number 10  |  October 20, 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, widened by $59.0 billion, or 52.9 percent, to $170.5 billion in the second quarter of 2020 (chart 1 and table A). This is the largest deficit recorded since the third quarter of 2008, when it was $178.2 billion. The revised first-quarter deficit was $111.5 billion.

The second-quarter deficit was 3.5 percent of current-dollar gross domestic product, up from 2.1 percent in the first quarter.

The $59.0 billion widening of the current-account deficit in the second quarter mostly reflected an expanded deficit on goods and reduced surpluses on primary income and on services.

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]
Series 2019 2020 Change 2020 Q1 to
2020 Q2
Q3 Q4 Q1 r Q2 p
Current account          
Exports of goods and services and income receipts (credits) 954,446 949,848 897,212 687,962 −209,250
Exports of goods and services 630,189 632,469 605,552 444,653 −160,899
Goods 410,930 411,390 403,533 288,885 −114,648
Services 219,259 221,079 202,019 155,768 −46,251
Primary income receipts 286,761 282,943 256,527 209,389 −47,138
Secondary income (current transfer) receipts 37,496 34,435 35,134 33,920 −1,214
Imports of goods and services and income payments (debits) 1,076,040 1,054,172 1,008,728 858,503 −150,225
Imports of goods and services 779,847 762,228 732,028 609,551 −122,477
Goods 632,059 613,887 595,281 508,223 −87,058
Services 147,788 148,341 136,747 101,328 −35,419
Primary income payments 225,140 220,985 204,491 180,176 −24,315
Secondary income (current transfer) payments 71,053 70,959 72,209 68,776 −3,433
Capital account          
Capital transfer receipts and other credits 15 6 19 16 −3
Capital transfer payments and other debits 850 2,026 2,990 1,069 −1,921
Financial account          
Net U.S. acquisition of financial assets excluding financial derivatives (net increase in assets / financial outflow (+)) 142,221 55,067 830,858 −147,602 −978,460
Direct investment assets 25,574 59,180 −9,065 35,861 44,926
Portfolio investment assets 20,460 21,806 115,814 −29,818 −145,632
Other investment assets 94,305 −26,128 724,354 −158,606 −882,960
Reserve assets 1,882 210 −245 4,960 5,205
Net U.S. incurrence of liabilities excluding financial derivatives (net increase in liabilities / financial inflow (+)) 238,964 83,479 952,306 −4,777 −957,083
Direct investment liabilities 78,119 56,506 52,201 −8,510 −60,711
Portfolio investment liabilities 105,660 −53,160 −20,547 338,957 359,504
Other investment liabilities 55,185 80,133 920,653 −335,225 −1,255,878
Financial derivatives other than reserves, net transactions −6,382 −933 −21,611 60,256 81,867
Statistical discrepancy          
Statistical discrepancy1 19,303 76,998 −28,572 89,025 117,597
Balances          
Balance on current account −121,594 −104,324 −111,516 −170,541 −59,025
Balance on goods and services −149,658 −129,759 −126,476 −164,898 −38,422
Balance on goods −221,129 −202,497 −191,748 −219,338 −27,590
Balance on services 71,471 72,738 65,272 54,440 −10,832
Balance on primary income 61,621 61,958 52,036 29,213 −22,823
Balance on secondary income −33,556 −36,524 −37,075 −34,856 2,219
Balance on capital account −835 −2,019 −2,971 −1,052 1,919
Net lending (+) or net borrowing (−) from current- and capital-account transactions2 −122,429 −106,344 −114,487 −171,593 −57,106
Net lending (+) or net borrowing (−) from financial-account transactions3 −103,125 −29,345 −143,059 −82,569 60,490
p
Preliminary
r
Revised
  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 International Transactions Accounts table 1.2 on BEA's website.

Exports of goods and services to, and income received from, foreign residents decreased $209.3 billion to $688.0 billion in the second quarter (charts 2 and 3 and tables A and B). Imports of goods and services from, and income paid to, foreign residents decreased $150.2 billion to $858.5 billion (charts 2 and 4 and tables A and C).

Chart 2. Current-Account Transactions

[Click chart to expand]

Trade in goods

Exports of goods decreased $114.6 billion to $288.9 billion, mostly reflecting decreases in industrial supplies and materials, mainly petroleum and products; in capital goods, mainly civilian aircraft, engines, and parts; and in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars. Imports of goods decreased $87.1 billion, to $508.2 billion, mostly reflecting decreases in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars, and in industrial supplies and materials, mostly petroleum and products.

Trade in services

Exports of services decreased $46.3 billion, to $155.8 billion, and imports of services decreased $35.4 billion, to $101.3 billion. The decreases in both exports and imports mostly reflected decreases in travel, primarily other personal travel, and in transport, primarily air passenger transport.

Primary income

Receipts of primary income decreased $47.1 billion, to $209.4 billion, mostly reflecting decreases in portfolio investment income, primarily income on equity securities, and in direct investment income, primarily earnings. Payments of primary income decreased $24.3 billion, to $180.2 billion, reflecting decreases in all components, led by other investment income, primarily interest on loans and deposits.

Secondary income

Receipts of secondary income decreased $1.2 billion, to $33.9 billion, mostly reflecting a decrease in private transfers, primarily private sector fines and penalties. Payments of secondary income decreased $3.4 billion, to $68.8 billion, reflecting decreases in private transfers, primarily private sector fines and penalties, and in general government transfers, primarily international cooperation.

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]
Series 2019 2020 Change 2020 Q1 to
2020 Q2
Q3 Q4 Q1 r Q2 p
Exports of goods and services and income receipts 954,446 949,848 897,212 687,962 −209,250
Exports of goods 410,930 411,390 403,533 288,885 −114,648
General merchandise 405,848 405,687 398,631 283,617 −115,014
Foods, feeds, and beverages 33,172 32,151 32,787 31,157 −1,630
Industrial supplies and materials 129,780 132,804 134,370 93,077 −41,293
Energy products 55,291 59,010 59,009 31,274 −27,735
Of which: Petroleum and products 47,373 50,844 51,076 25,149 −25,927
Nonenergy products 74,489 73,794 75,361 61,803 −13,558
Capital goods except automotive 135,007 135,521 131,854 99,109 −32,745
Automotive vehicles, parts, and engines 41,324 39,756 37,832 15,539 −22,293
Consumer goods except food and automotive 51,462 49,797 46,983 33,477 −13,506
Other general merchandise 15,102 15,657 14,805 11,257 −3,548
Net exports of goods under merchanting 139 119 151 123 −28
Nonmonetary gold 4,943 5,585 4,750 5,145 395
Exports of services1 219,259 221,079 202,019 155,768 −46,251
Manufacturing services on physical inputs owned by others n.a. n.a. n.a. n.a. n.a.
Maintenance and repair services n.i.e. 7,088 7,432 4,189 3,323 −866
Transport 22,333 22,693 20,786 10,235 −10,551
Travel (for all purposes including education) 47,721 48,219 38,982 13,222 −25,760
Business 9,107 9,368 7,183 1,890 −5,293
Personal 38,613 38,852 31,799 11,332 −20,467
Construction 849 734 588 502 −86
Insurance services 4,260 3,762 3,819 3,709 −110
Financial services 33,483 34,303 33,638 32,537 −1,101
Charges for the use of intellectual property n.i.e. 29,237 29,993 28,319 25,596 −2,723
Telecommunications, computer, and information services 14,267 14,306 13,437 12,718 −719
Other business services 48,187 47,736 47,422 43,089 −4,333
Personal, cultural, and recreational services 5,876 5,978 4,966 5,321 355
Government goods and services n.i.e. 5,959 5,924 5,873 5,515 −358
Primary income receipts 286,761 282,943 256,527 209,389 −47,138
Investment income 285,080 281,254 254,846 207,850 −46,996
Direct investment income 144,810 146,363 119,918 102,524 −17,394
Income on equity 138,192 140,194 114,184 97,193 −16,991
Dividends and withdrawals 95,327 83,643 112,879 70,331 −42,548
Reinvested earnings 42,865 56,551 1,305 26,862 25,557
Interest 6,618 6,168 5,734 5,331 −403
Portfolio investment income 108,247 107,068 109,726 89,014 −20,712
Income on equity and investment fund shares 73,190 72,083 74,988 58,352 −16,636
Interest on debt securities 35,057 34,985 34,737 30,661 −4,076
Other investment income 31,780 27,672 25,054 16,247 −8,807
Reserve asset income 243 151 149 65 −84
Compensation of employees 1,682 1,689 1,680 1,539 −141
Secondary income (current transfer) receipts2 37,496 34,435 35,134 33,920 −1,214
p
Preliminary
r
Revised
n.a.
Not available
n.i.e.
Not included elsewhere
  1. See also International Services table 2.1.
  2. Secondary income (current transfer) 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 International Transactions Accounts 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]
Series 2019 2020 Change 2020 Q1 to
2020 Q2
Q3 Q4 Q1 r Q2 p
Imports of goods and services and income payments 1,076,040 1,054,172 1,008,728 858,503 −150,225
Imports of goods 632,059 613,887 595,281 508,223 −87,058
General merchandise 628,870 609,144 589,085 475,181 −113,904
Foods, feeds, and beverages 38,328 37,398 38,673 36,836 −1,837
Industrial supplies and materials 129,899 126,630 121,706 89,925 −31,781
Energy products 54,163 53,410 48,332 23,162 −25,170
Of which: Petroleum and products 50,903 49,775 45,598 20,498 −25,100
Nonenergy products 75,736 73,220 73,374 66,763 −6,611
Capital goods except automotive 169,509 168,127 161,739 145,981 −15,758
Automotive vehicles, parts, and engines 95,356 89,707 87,846 41,028 −46,818
Consumer goods except food and automotive 167,021 157,381 150,663 140,127 −10,536
Other general merchandise 28,757 29,901 28,458 21,285 −7,173
Nonmonetary gold 3,189 4,743 6,196 33,042 26,846
Imports of services1 147,788 148,341 136,747 101,328 −35,419
Manufacturing services on physical inputs owned by others n.a. n.a. n.a. n.a. n.a.
Maintenance and repair services n.i.e. 1,941 1,949 1,561 1,234 −327
Transport 26,668 26,570 23,305 13,244 −10,061
Travel (for all purposes including education) 33,151 33,717 24,865 2,563 −22,302
Business 4,685 4,609 3,065 355 −2,710
Personal 28,466 29,108 21,800 2,208 −19,592
Construction 330 321 315 244 −71
Insurance services 13,403 13,954 14,104 14,532 428
Financial services 10,157 10,010 10,058 9,345 −713
Charges for the use of intellectual property n.i.e. 10,631 10,587 11,194 9,759 −1,435
Telecommunications, computer, and information services 10,982 11,088 9,907 9,427 −480
Other business services 29,171 28,550 29,671 29,032 −639
Personal, cultural, and recreational services 5,249 5,483 5,666 5,809 143
Government goods and services n.i.e. 6,105 6,113 6,100 6,140 40
Primary income payments 225,140 220,985 204,491 180,176 −24,315
Investment income 220,430 216,145 199,834 176,503 −23,331
Direct investment income 60,941 61,104 43,395 35,442 −7,953
Portfolio investment income 124,526 124,328 127,424 120,250 −7,174
Income on equity and investment fund shares 42,401 41,897 45,336 41,286 −4,050
Interest on debt securities 82,125 82,431 82,088 78,964 −3,124
Other investment income 34,963 30,713 29,014 20,811 −8,203
Compensation of employees 4,711 4,840 4,656 3,673 −983
Secondary income (current transfer) payments2 71,053 70,959 72,209 68,776 −3,433
           
Supplemental detail on insurance transactions:          
Premiums paid 32,787 33,042 32,738 33,041 303
Losses recovered 19,075 19,351 19,115 18,928 −187
p
Preliminary
r
Revised
n.a.
Not available
n.i.e.
Not included elsewhere
  1. See also International Services table 2.1
  2. Secondary income (current transfer) 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 International Transactions Accounts table 1.2, table 2.1, table 3.1, table 4.1, and table 5.1 on BEA's website.

Capital-transfer payments decreased $1.9 billion, to $1.1 billion, in the second quarter, mostly reflecting a decrease in investment grants (table A).

Net financial-account transactions were −$82.6 billion in the second quarter, reflecting net U.S. borrowing from foreign residents.

Financial assets

Second-quarter transactions decreased U.S. residents' foreign financial assets by $147.6 billion (charts 5 and 6 and table D). Transactions decreased portfolio investment assets by $29.8 billion, primarily equity securities, and other investment assets, mostly deposits, by $158.6 billion. Transactions in deposits included a net withdrawal by the U.S. Federal Reserve of $130.8 billion from deposits abroad. Transactions increased direct investment assets, primarily equity, by $35.9 billion, and reserve assets by $5.0 billion.

Liabilities

Second-quarter transactions decreased U.S. liabilities to foreign residents by $4.8 billion. Transactions decreased direct investment liabilities, mainly debt instruments, by $8.5 billion and other investment liabilities, mostly deposits, by $335.2 billion. Foreign banks withdrew $213.0 billion of their deposits in U.S. banks. Transactions increased portfolio investment liabilities, mainly short-term U.S. Treasury securities, by $339.0 billion.

Financial derivatives

Net transactions in financial derivatives were $60.3 billion in the second quarter, reflecting net lending to 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]
Series 2019 2020 Change 2020 Q1 to
2020 Q2
Q3 Q4 Q1 r Q2 p
Net U.S. acquisition of financial assets excluding financial derivatives (net increase in assets / financial outflow (+)) 142,221 55,067 830,858 −147,602 −978,460
Direct investment assets 25,574 59,180 −9,065 35,861 44,926
Equity 45,886 55,296 15,620 55,742 40,122
Equity other than reinvestment of earnings 3,021 −1,255 14,316 28,881 14,565
Reinvestment of earnings 42,865 56,551 1,305 26,862 25,557
Debt instruments −20,312 3,884 −24,685 −19,882 4,803
Portfolio investment assets 20,460 21,806 115,814 −29,818 −145,632
Equity and investment fund shares −56,839 −99,715 279,965 −67,734 −347,699
Debt securities 77,299 121,521 −164,151 37,916 202,067
Short-term securities 61,443 66,150 −73,206 −3,455 69,751
Long-term corporate securities 7,841 35,418 −69,619 36,431 106,050
Other long-term securities 8,015 19,953 −21,326 4,940 26,266
Other investment assets 94,305 −26,128 724,354 −158,606 −882,960
Other equity 18 0 1,298 10 −1,288
Currency and deposits 16,306 66,347 539,992 −156,754 −696,746
Loans 73,336 −91,595 187,829 3,358 −184,471
Trade credit and advances 4,645 −879 −4,765 −5,220 −455
Reserve assets 1,882 210 −245 4,960 5,205
Monetary gold 0 0 0 0 0
Special drawing rights 63 57 49 20 −29
Reserve position in the International Monetary Fund 1,754 155 −327 4,902 5,229
Other reserve assets 64 −2 33 38 5
Net U.S. incurrence of liabilities excluding financial derivatives (net increase in liabilities / financial inflow (+)) 238,964 83,479 952,306 −4,777 −957,083
Direct investment liabilities 78,119 56,506 52,201 −8,510 −60,711
Equity 53,158 78,529 44,718 26,343 −18,375
Equity other than reinvestment of earnings 17,832 46,367 27,540 15,740 −11,800
Reinvestment of earnings 35,326 32,161 17,178 10,603 −6,575
Debt instruments 24,961 −22,023 7,482 −34,853 −42,335
Portfolio investment liabilities 105,660 −53,160 −20,547 338,957 359,504
Equity and investment fund shares −42,481 −72,736 263,713 66,499 −197,214
Debt securities 148,141 19,576 −284,261 272,458 556,719
Short term 60,400 −48,444 −10,748 337,592 348,340
Treasury bills and certificates 42,275 −43,855 13,452 311,306 297,854
Federally sponsored agency securities −748 5,493 −4,708 −1,601 3,107
Other short-term securities 18,873 −10,082 −19,492 27,887 47,379
Long term 87,741 68,020 −273,513 −65,135 208,378
Treasury bonds and notes 32,139 19,117 −300,497 −209,375 91,122
Federally sponsored agency securities 10,507 5,067 56,721 −52,023 −108,744
Corporate bonds and notes 44,514 43,267 −27,992 189,477 217,469
Other 581 569 −1,745 6,786 8,531
Other investment liabilities 55,185 80,133 920,653 −335,225 −1,255,878
Other equity n.a. n.a. n.a. n.a. n.a
Currency 19,110 17,579 26,014 29,399 3,385
Deposits 74,616 3,075 481,772 −271,946 −753,718
Loans −37,372 56,253 409,408 −94,162 −503,570
Trade credit and advances −1,169 3,226 3,459 1,485 −1,974
Special drawing rights allocations 0 0 0 0 0
p
Preliminary
r
Revised

Note. The statistics are presented in International Transactions Accounts 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 2020 International Transactions Aggregates
[Millions of dollars, seasonally adjusted]
Series Preliminary Estimates Revised Estimates
Balance on current account −104,204 −111,516
Balance on goods −192,332 −191,748
Balance on services 73,277 65,272
Balance on primary income 52,488 52,036
Balance on secondary income (current transfers) −37,637 −37,075
Net lending or borrowing from financial-account transactions −201,105 −143,059
Net U.S. acquisition of financial assets 722,712 830,858
Net U.S. incurrence of liabilities 901,987 952,306
Financial derivatives other than reserves, net transactions −21,830 −21,611