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FOR WIRE TRANSMISSION: 10:00 A.M. EDT, WEDNESDAY, SEPTEMBER 13, 2000
BEA 00-28

U.S. International Transactions Second Quarter 2000

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Harlan W. King:                 (202) 606-9571                                     BEA 00-28
Recorded Message:                     606-5362



                     U.S. International Transactions: Second Quarter 2000

                                       Current Account

     The U.S. current-account deficit--the combined balances on trade in goods and services,
income, and net unilateral current transfers--increased to $106.1 billion in the second quarter
from $101.5 billion (revised) in the first, according to preliminary estimates of the Bureau of
Economic Analysis.  The increase was nearly all accounted for by an increase in the deficit on
goods.

Goods and services

     The deficit on goods and services increased to $89.3 billion in the second quarter from
$85.1 billion in the first.

     Goods

       The deficit on goods increased to $110.2 billion in the second quarter from
$105.8 billion in the first.

       Goods exports increased to $191.8 billion from $183.7 billion.  The increase was mostly
accounted for by an increase in capital goods, especially computers, semiconductors,
telecommunications equipment, and civilian aircraft.

       Goods imports increased to $302.0 billion from $289.6 billion.   The increase was largely
accounted for by increases in capital goods, especially computers and telecommunications
equipment, and in consumer goods.  The increase in petroleum products slowed, as petroleum
prices rose considerably less than in recent quarters.

     Services

       The surplus on services increased to $21.0 billion in the second quarter from
$20.7 billion in the first.

       Service receipts increased to $73.3 billion from $72.2 billion.  The increase was
accounted for by increases in royalties and license fees and in travel.

       Service payments increased to $52.4 billion from $51.5 billion.  The increase was mostly
accounted for by increases in travel, in "other" transportation, and in passenger fares.

Income

     The deficit on income increased to $4.5 billion in the second quarter from $4.4 billion in
the first.

     Investment income

       Income receipts on U.S.-owned assets abroad increased to $86.4
billion from $80.3 billion.  The increase was mainly accounted for by increases in direct
investment receipts and in "other" private receipts.

       Income payments on foreign-owned assets in the United States increased to $89.5 billion
from $83.3 billion.  The increase was mainly accounted for by increases in "other" private
payments and in direct investment payments.

     Compensation of employees

       Receipts for compensation of U.S. workers abroad were
unchanged at $0.6 billion.  Payments for compensation of foreign workers in the United States
were unchanged at $2.0 billion.

Unilateral current transfers

     Net unilateral current transfers increased slightly to $12.3 billion from $12.0 billion,
mostly as a result of an increase in U.S. Government grants.


                                Capital and Financial Account

                                       Capital Account

     Net capital account transactions were unchanged at $0.2 billion.

                                      Financial Account

     Net recorded financial inflows--the difference between changes in U.S.-owned assets
abroad and changes in foreign-owned assets in the United States--were $149.1 billion in the
second quarter, up from $57.6 billion (revised) in the first.

U.S.-owned assets abroad

     U.S.-owned assets abroad increased $73.6 billion in the second quarter, following an
increase of $179.0 billion in the first.

     U.S. claims on foreigners reported by U.S. banks decreased $14.9 billion in the second
quarter, in contrast to an increase of $55.5 billion in the first.  The decrease in second-quarter
lending reflected little lending to banks abroad and a large decrease in banks' domestic
customers' claims, both of which were in response to unsettled conditions in world financial
markets.

     Net U.S. purchases of  foreign securities were $26.4 billion in second quarter, down from
$27.2 billion in the first.  Net U.S. purchases of foreign stocks doubled to $33.7 billion,
primarily as a result of exchanges of stock related to acquisitions of U.S. companies by foreign
companies; non-merger related transactions resulted in net sales of other stocks, reflecting a
sharp decline in equity prices abroad.  Transactions in foreign bonds shifted to net U.S. sales of
$7.4 billion from net U.S. purchases of $11.4 billion, partly in response to the sharp increase in
U.S. bond yields in May.

     Net financial outflows for U.S. direct investment abroad were $37.5 billion in the second
quarter, down from $43.0 billion in the first.  Net intercompany debt shifted to inflows, while
net equity capital outflows nearly doubled, and reinvested earnings edged up.

     U.S. official reserve assets decreased $2.0 billion in the second quarter, following an
increase of $0.6 billion in the first.

Foreign-owned assets in the United States

     Foreign-owned assets in the United States increased $222.7 billion in the second quarter,
following an increase of $236.5 billion in the first.

     Net foreign purchases of U.S. securities other than U.S. Treasury securities were $86.5
billion in the second quarter, down from record net purchases of $132.4 billion in the first.  In
the second quarter, net foreign purchases of U.S. stocks were $26.1 billion, down from $61.2
billion, partly in response to the sharp decline in U.S. equity prices early in the quarter, and net
foreign purchases of U.S. corporate and other bonds were $60.5 billion, down from $71.2
billion.

     U.S. liabilities to foreigners reported by U.S. banks, excluding U.S. Treasury securities,
increased $48.7 billion in the second quarter, following a decrease of $8.8 billion in the first.
Most of the second-quarter increase was attributable to a sharp rise in banks' own liabilities,
mostly to own foreign offices, as U.S. banks borrowed heavily from abroad to meet the higher
demand for short-term funds in U.S. banking and securities markets.

     Net financial inflows for foreign direct investment in the United States were $79.7 billion
in the second quarter, up sharply from $49.0 billion in the first.  Net equity capital inflows rose
sharply as a result of increased acquisitions of U.S. companies by foreign companies.
Reinvested earnings increased slightly, and net intercompany debt inflows decreased.

     Net foreign sales of U.S. Treasury securities were $20.7 billion in the second quarter, up
from net sales of $9.2 billion in the first.  The step-up in net sales was partly attributable to
lower yields on longer-term Treasury bonds.

     Net U.S. currency shipments to foreign countries were $1.0 billion in the second quarter,
in contrast to net shipments from foreign countries to the United States of $6.8 billion in the
first.

     Foreign official assets in the United States increased $5.9 billion in the second quarter,
following an increase of $22.0 billion in the first.  There were net sales of U.S. Treasury
securities in the second quarter.

     The statistical discrepancy--errors and omissions in recorded transactions--was a negative
$43.1 billion in the second quarter, compared with a positive $43.8 billion in the first.

     In the second quarter, the U.S. dollar appreciated 3 percent on a trade-weighted quarterly
average basis against a group of 7 major currencies.


                                           Revisions

     The first-quarter international transactions are revised from previously published
estimates.  The current-account deficit for the first quarter was revised to $101.5 billion from
$102.3 billion.  The goods deficit was unchanged at $105.8 billion; the services surplus was
revised to $20.7 billion from $19.7 billion; the deficit on income was revised to $4.4 billion
from $4.2 billion; and net unilateral current transfers was revised to $12.0 billion from $11.9
billion.  Net recorded financial inflows were revised to $57.6 billion from $71.7 billion.

                                         *     *     *

     Next release:


     Third quarter 2000............................................December 14, 2000 (Thursday)

                                         *     *     *

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     Summary BEA estimates are available on recorded messages at the time of public release
at the following telephone numbers:

          (202) 606-5362 U.S. international transactions
                         -5306 Gross domestic product
                         -5303 Personal income and outlays

     Most of BEA's estimates and analyses appear in the Survey of Current Business, BEA's
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                                                                                                                                                  September 13, 2000
    Table 1.--U.S. International Transactions
    [Millions of dollars, quarters seasonally adjusted]

                                                                                                        1999                                2000             Change:
                                      (Credits +, debits -)                                   1999                                                            2000
                                                                                                          I       II       III      IV       Ir       IIp     I-II

                                        Current account

     1 Exports of goods and services and income receipts..................................  1,232,407  293,717  300,994  313,084  324,612  336,854  352,085   15,231

     2      Exports of goods and services.................................................    956,242  230,321  234,297  241,969  249,653  255,977  265,133    9,156

     3          Goods, balance of payments basis1.........................................    684,358  163,949  166,443  173,881  180,085  183,728  191,810    8,082

     4          Services2.................................................................    271,884   66,372   67,854   68,088   69,568   72,249   73,323    1,074
     5              Transfers under U.S. military agency sales contracts..................     16,334    4,240    4,561    3,944    3,589    3,574    3,722      148

     6              Travel................................................................     74,881   18,140   18,564   18,695   19,482   20,431   20,749      318
     7              Passenger fares.......................................................     19,776    4,814    4,902    5,105    4,955    5,062    5,088       26
     8              Other transportation..................................................     27,033    6,515    6,692    6,728    7,097    7,252    7,397      145

     9               Royalties and license fees...........................................     36,467    9,114    9,140    9,106    9,107    9,353    9,685      332
    10               Other private services...............................................     96,508   23,346   23,772   24,271   25,118   26,373   26,469       96
    11               U.S. Government miscellaneous services...............................        885      203      223      239      220      204      213        9

    12      Income receipts...............................................................    276,165   63,396   66,697   71,115   74,959   80,877   86,952    6,075
    13           Income receipts on U.S.-owned assets abroad..............................    273,957   62,861   66,149   70,556   74,393   80,302   86,370    6,068
    14               Direct investment receipts...........................................    118,802   26,946   28,804   31,361   31,691   34,116   37,192    3,076
    15               Other private receipts...............................................    151,958   35,004   36,535   38,449   41,970   45,091   47,932    2,841
    16               U.S. Government receipts.............................................      3,197      911      810      746      732    1,095    1,246      151
    17           Compensation of employees................................................      2,208      535      548      559      566      575      582        7

    18 Imports of goods and services and income payments.................................. -1,515,861 -349,513 -368,439 -391,337 -406,575 -426,335 -445,887  -19,552

    19      Imports of goods and services................................................. -1,221,213 -282,997 -297,597 -314,687 -325,933 -341,094 -354,392  -13,298

    20          Goods, balance of payments basis1......................................... -1,029,917 -236,973 -250,427 -266,199 -276,318 -289,566 -302,026  -12,460

    21          Services2.................................................................   -191,296  -46,024  -47,170  -48,488  -49,615  -51,528  -52,366     -838
    22              Direct defense expenditures...........................................    -13,650   -3,293   -3,373   -3,626   -3,358   -3,322   -3,350      -28

    23              Travel................................................................    -59,351  -14,560  -14,718  -14,799  -15,274  -15,837  -16,107     -270
    24              Passenger fares.......................................................    -21,405   -5,215   -5,274   -5,348   -5,568   -5,777   -5,964     -187
    25              Other transportation..................................................    -34,137   -7,784   -8,187   -8,953   -9,214   -9,582   -9,791     -209

    26               Royalties and license fees...........................................    -13,275   -3,081   -3,224   -3,314   -3,656   -3,590   -3,702     -112
    27               Other private services...............................................    -46,657  -11,401  -11,719  -11,682  -11,855  -12,706  -12,738      -32
    28               U.S. Government miscellaneous services...............................     -2,821     -690     -675     -766     -690     -714     -714     ....

    29      Income payments...............................................................   -294,648  -66,516  -70,842  -76,650  -80,642  -85,241  -91,495   -6,254
    30           Income payments on foreign-owned assets in the United States.............   -287,059  -64,636  -68,962  -74,749  -78,712  -83,289  -89,515   -6,226
    31               Direct investment payments...........................................    -56,098  -10,916  -14,106  -15,660  -15,416  -17,048  -18,771   -1,723
    32               Other private payments...............................................   -135,830  -31,051  -31,701  -34,942  -38,136  -40,167  -43,843   -3,676
    33               U.S. Government payments.............................................    -95,131  -22,669  -23,155  -24,147  -25,160  -26,074  -26,901     -827
    34           Compensation of employees................................................     -7,589   -1,880   -1,880   -1,901   -1,930   -1,952   -1,980      -28

    35 Unilateral current transfers, net..................................................    -48,025  -10,831  -11,537  -11,396  -14,260  -12,024  -12,336     -312

    36      U.S. Government grants........................................................    -13,774   -2,574   -3,097   -2,847   -5,256   -2,912   -3,180     -268
    37      U.S. Government pensions and other transfers..................................     -4,401   -1,066   -1,074   -1,080   -1,181   -1,114   -1,113        1
    38      Private remittances and other transfers.......................................    -29,850   -7,191   -7,366   -7,469   -7,823   -7,998   -8,043      -45


    Table 1.--U.S. International Transactions (Continued)                                                                                         September 13, 2000
    [Millions of dollars, quarters seasonally adjusted]

                                                                                                        1999                                2000             Change:
                                      (Credits +, debits -)                                   1999                                                            2000
                                                                                                          I       II       III      IV       Ir       IIp     I-II

                                  Capital and financial account

                                         Capital account

    39 Capital account transactions, net..................................................     -3,500      157      165      171   -3,993      166      163       -3

                                        Financial account

    40 U.S.-owned assets abroad, net (increase/financial outflow (-)).....................   -430,187  -21,555 -170,842 -122,909 -114,882 -178,958  -73,648  105,310

    41     U.S. official reserve assets, net..............................................      8,747    4,068    1,159    1,951    1,569     -554    2,020    2,574
    42          Gold......................................................................       ....     ....     ....     ....     ....     ....     ....     ....
    43          Special drawing rights....................................................         10      562     -190     -184     -178     -180     -180     ....
    44          Reserve position in the International Monetary Fund.......................      5,484        3    1,413    2,268    1,800     -237    2,328    2,565
    45          Foreign currencies........................................................      3,253    3,503      -64     -133      -53     -137     -128        9

    46     U.S. Government assets, other than official reserve assets, net................      2,751      118     -392     -686    3,711     -131     -572     -441
    47          U.S. credits and other long-term assets...................................     -6,175   -1,314   -2,167   -1,595   -1,099   -1,750   -1,229      521
    48          Repayments on U.S. credits and other long-term assets.....................      9,560    1,554    1,887    1,026    5,093    1,328      715     -613
    49          U.S. foreign currency holdings and U.S. short-term assets, net............       -634     -122     -112     -117     -283      291      -58     -349

    50     U.S. private assets, net.......................................................   -441,685  -25,741 -171,609 -124,174 -120,162 -178,273  -75,096  103,177
    51          Direct investment.........................................................   -150,901  -41,112  -32,958  -43,552  -33,280  -42,963  -37,495    5,468
    52          Foreign securities........................................................   -128,594    1,107  -71,131  -41,420  -17,150  -27,236  -26,350      886
    53          U.S. claims on unaffiliated foreigners reported by
                     U.S. nonbanking concerns.............................................    -92,328  -14,223  -25,734  -27,943  -24,428  -52,563  -26,112   26,451
    54          U.S. claims reported by U.S. banks, not included elsewhere................    -69,862   28,487  -41,786  -11,259  -45,304  -55,511   14,861   70,372

    55 Foreign-owned assets in the United States, net (increase/financial inflow (+)).....    753,564  102,780  272,008  194,210  184,567  236,535  222,736  -13,799

    56     Foreign official assets in the United States, net..............................     42,864    4,274   -1,096   12,191   27,495   22,015    5,905  -16,110
    57          U.S. Government securities................................................     32,527    6,793     -916   14,798   11,852   24,305    6,334  -17,971
    58              U.S. Treasury securities..............................................     12,177      800   -6,708   12,963    5,122   16,198   -4,000  -20,198
    59              Other.................................................................     20,350    5,993    5,792    1,835    6,730    8,107   10,334    2,227
    60          Other U.S. Government liabilities.........................................     -3,255   -1,485   -1,099     -760       89     -644     -772     -128
    61          U.S. liabilities reported by U.S. banks, not included elsewhere...........     12,692   -1,139    1,436   -2,032   14,427   -2,577     -561    2,016
    62          Other foreign official assets.............................................        900      105     -517      185    1,127      931      904      -27

    63     Other foreign assets in the United States, net.................................    710,700   98,506  273,104  182,019  157,072  214,520  216,831    2,311
    64          Direct investment.........................................................    275,533   26,779  143,802   55,563   49,390   48,962   79,699   30,737
    65          U.S. Treasury securities..................................................    -20,464   -7,505   -5,407    9,639  -17,191   -9,248  -20,661  -11,413
    66          U.S. securities other than U.S. Treasury securities.......................    331,523   62,815   80,838   95,620   92,250  132,416   86,547  -45,869
    67          U.S. currency.............................................................     22,407    2,440    3,057    4,697   12,213   -6,847      989    7,836
    68          U.S. liabilities to unaffiliated foreigners reported by
                     U.S. nonbanking  concerns............................................     34,298   27,928   13,663   -8,085      792   58,061   21,597  -36,464
    69          U.S. liabilities reported by U.S. banks, not included elsewhere...........     67,403  -13,951   37,151   24,585   19,618   -8,824   48,660   57,484

    70 Statistical discrepancy (sum of above items with sign reversed)....................     11,602  -14,755  -22,349   18,177   30,531   43,762  -43,113  -86,875

       Memoranda:
    71 Balance on goods (lines 3 and 20)..................................................   -345,559  -73,024  -83,984  -92,318  -96,233 -105,838 -110,216   -4,378
    72 Balance on services (lines 4 and 21)...............................................     80,588   20,348   20,684   19,600   19,953   20,721   20,957      236
    73 Balance on goods and services (lines 2 and 19).....................................   -264,971  -52,676  -63,300  -72,718  -76,280  -85,117  -89,259   -4,142
    74 Balance on income (lines 12 and 29)................................................    -18,483   -3,120   -4,145   -5,535   -5,683   -4,364   -4,543     -179
    75 Unilateral current transfers, net (line 35)........................................    -48,025  -10,831  -11,537  -11,396  -14,260  -12,024  -12,336     -312
    76 Balance on current account (lines 1, 18, and 35 or lines 73, 74, and 75)...........   -331,479  -66,627  -78,982  -89,649  -96,223 -101,505 -106,138   -4,633

    r  Revised.  p  Preliminary.
    1. Adjusted for timing, valuation, and coverage to balance of payments basis; excludes exports under U. S. military agency sales
    contracts and imports of U. S. military agencies.
    2. Includes some goods that cannot be separately identified from services.
    NOTE:--Details may not add to totals because of rounding.     Source:  U. S. Department of Commerce, Bureau of Economic Analysis

 


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