News Release

FOR WIRE TRANSMISSION: 8:30 A.M. EDT, THURSDAY, June 30, 2005
BEA 05-31

U.S. Net International Investment Position at Yearend, 2004



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Elena L. Nguyen:                (202) 606-9555                        BEA 05-31
Christopher A. Gohrband:        (202) 606-9564



          U.S. Net International Investment Position at Yearend 2004



      The U.S. net international investment position at yearend 2004 was
-$2,484.2 billion (preliminary) with direct investment valued at current cost,
as the value of foreign investments in the United States exceeded the value of
U.S. investments abroad (table 1).  At yearend 2003, the U.S. net international
investment position was -$2,156.7 billion (revised).

      The -$327.5 billion change in the net investment position from yearend
2003 to yearend 2004 was largely due to substantial net foreign purchases of
U.S. Treasury securities and U.S. corporate bonds.  The impact of these net
purchases was partly offset by appreciation of most foreign currencies against
the U.S. dollar, which raised the dollar value of U.S.-owned assets abroad,
especially of U.S.-owned foreign stocks.  In addition, increases in stock
market prices raised the value of U.S. holdings of foreign stocks somewhat more
than they raised the value of foreign holdings of U.S. stocks.

      With direct investment valued at the current stock market value of
owners' equity, the net investment position was -$2,542.2 billion (preliminary)
at yearend 2004, compared with -$2,372.4 billion (revised) at yearend 2003.
The -$169.9 billion change in the net investment position on this basis
resulted from the same factors as above.  Price and exchange-rate changes were
larger on this basis than with direct investment valued at current cost.  Other
highlights include:

      In regard to transactions, foreign acquisitions of assets in the United
    States were a record $1,440.1 billion in 2004, up from $889.0 billion in
    2003.  Foreign official acquisitions of assets were a record $394.7
    billion, following last year's record $278.3 billion; acquisitions of U.S.
    Treasury securities were a record.  Increases in liabilities reported by
    U.S. banks were a record $322.6 billion, more than triple last year's
    increase and more than double the previous record in 1997.  Net foreign
    purchases of U.S. securities other than U.S. Treasury securities were
    $369.8 billion; net foreign purchases of U.S. bonds were a record $309.3
    billion and net foreign purchases of U.S. stocks were $60.5 billion.
    Foreign direct investment in the United States rebounded, liabilities
    reported by U.S. nonbanks grew more strongly than in 2003, and net foreign
    purchases of U.S. Treasury securities by private foreigners were slightly
    higher.

      Also in regard to transactions, U.S. acquisitions of assets abroad were a
    record $855.5 billion in 2004, up from $328.4 billion in 2003.  The
    increase was mostly accounted for by record increases in claims reported by
    U.S. banks and nonbanking concerns and a record increase in U.S. direct
    investment abroad.  U.S. banks' claims increased $356.1 billion, compared
    to a $9.6 billion increase in 2003; U.S. nonbanks' claims increased $149.0
    billion, compared to a $24.2 billion increase; and U.S. direct investment
    abroad increased $252.0 billion, compared to $140.6 billion.  In contrast,
    net U.S. purchases of foreign securities decreased to $102.4 billion from
    $156.1 billion in 2003, as net U.S. purchases of both foreign stocks and
    bonds slowed.

      Price appreciation in most world stock markets increased the value of
    both foreign holdings of U.S. corporate stocks and U.S. holdings of foreign
    corporate stocks.  Price appreciation of stocks also increased the value of
    owners' equity of foreign direct investment in the United States and of
    U.S. direct investment abroad on a market-value basis.

      Appreciation of most foreign currencies against the U.S. dollar from
    yearend 2003 to yearend 2004 raised the dollar value of all foreign-
    currency-denominated assets and liabilities, especially the value of U.S.-
    owned foreign corporate stocks and U.S. direct investment abroad.

____________________________________________________________________________________

                   Valuation Methods for Direct Investment

The current-cost method values the U.S. and foreign parents' share of their
affiliates' investment in plant and equipment using the current cost of capital
equipment, in land using general price indexes, and in inventories using
estimates of their replacement cost.

The market-value method values the owners' equity component of the direct
investment position using indexes of stock market prices.

The historical-cost method values all assets and liabilities at their book
value.  Country and industry detail can be shown only under this method.  Data
on this basis are not presented in this release.
____________________________________________________________________________________

      U.S.-owned assets abroad increased $1,411.8 billion to $9,052.8 billion
with U.S. direct investment abroad valued at current cost, and they increased
$1,676.1 billion to $9,972.8 billion with U.S. direct investment abroad valued
at market value.

      U.S. holdings of foreign securities increased $482.9 billion to $3,436.7
billion.  Holdings of foreign stocks increased as a result of large price
appreciation, exchange-rate appreciation of foreign currencies against the U.S.
dollar, and net U.S. purchases.   Holdings of foreign bonds increased as a
result of exchange-rate appreciation, net U.S. purchases, and small price
appreciation.

      U.S. direct investment abroad valued at current cost increased $304.8
billion to $2,367.4 billion, mostly as a result of large financial outflows of
$252.0 billion.  At market value, U.S. direct investment abroad increased
$569.2 billion to $3,287.4 billion, reflecting large financial outflows, strong
price appreciation of owners' equity resulting from an increase in foreign
stock prices, and exchange-rate appreciation of foreign currencies against the
U.S. dollar.

      Claims on foreigners reported by U.S. banks increased $414.7 billion to
$2,174.0 billion, mostly as a result of financial outflows of $356.1 billion.

      Claims on unaffiliated foreigners reported by U.S. nonbanking concerns
increased $204.6 billion to $801.5 billion, mostly as a result of financial
outflows of $149.0 billion.

      U.S. official reserve assets increased $6.0 billion to $189.6 billion.

      Foreign-owned assets in the United States increased $1,739.3 billion to
$11,537.0 billion with foreign direct investment in the United States valued at
current cost, and they increased $1,846.0 billion to $12,515.0 billion with
foreign direct investment in the United States valued at market value.

      Foreign official assets in the United States increased $414.9 billion to
$1,982.0 billion.  The increase was largely attributable to net purchases of
U.S. Treasury securities.

      Foreign holdings of U.S. securities other than U.S. Treasury securities,
excluding official holdings, increased $579.7 billion to $3,987.8 billion.
Foreign holdings of U.S. stocks increased as a result of large price
appreciation and modest net foreign purchases.  Foreign holdings of U.S. bonds
increased mostly as a result of net foreign purchases.

      Foreign holdings of U.S. Treasury securities, excluding official
holdings, increased $96.5 billion to $639.7 billion, mostly as a result of
sizable net foreign purchases.

      U.S. liabilities to private foreigners and international financial
institutions reported by U.S. banks increased $383.5 billion, to $2,304.6
billion, mostly as a result of financial inflows of $322.6 billion.

      Liabilities to unaffiliated foreigners reported by U.S. nonbanking
concerns increased $126.9 billion to $581.3 billion, mostly as a result of
financial inflows of $124.4 billion.

      Foreign direct investment in the United States valued at current cost
increased $123.0 billion to $1,708.9 billion, mostly as a result of net
financial inflows.  At market value, foreign direct investment in the United
States increased $229.7 billion to $2,686.9 billion, as a result of net
financial inflows and price appreciation of owners' equity resulting from an
increase in U.S. stock prices.

      U.S. currency held by foreigners increased $14.8 billion to $332.7
billion.


                           *          *          *

                                   Revisions

      The previously published net international investment position in 2003
was -$2,430.7 billion with direct investment at current cost and -$2,651.0
billion with direct investment at market value.

      This year, the estimates of U.S. holdings of foreign securities for
2002-2003 were revised to incorporate results from the U.S. Treasury
Department's Annual Survey of U.S. Portfolio Investment Abroad as of December
31, 2003.  In addition, the estimates of U.S. holdings of foreign bonds for
1998-2001 were revised to incorporate revised data from the U.S. Treasury
Department's Benchmark Survey of U.S. Portfolio Investment Abroad as of
December 31, 2001. The estimates of foreign holdings of U.S. securities for
2002-2003 were revised to incorporate results from the U.S. Treasury
Department's Benchmark Survey of Foreign Portfolio Investment in the United
States as of June 30, 2004.  The estimates of foreign holdings of U.S.
corporate bonds and stocks for 2002-2003 also include the incorporation of
results from the U.S. Treasury Department's Annual Survey of Foreign Portfolio
Investment in the United States as of June 30, 2003.  The estimates of
short-term U.S. Treasury obligations and other short-term instruments reported
by U.S. banks for 2001-2003 were revised to incorporate results from the U.S.
Treasury Department's Benchmark Survey of Foreign Portfolio Investment in the
United States as of June 30, 2004, as well as results from the annual surveys
as of June 30, 2002 and June 30, 2003.  The estimates of U.S. claims reported
by U.S. banks for 1998-2003 were revised to incorporate new information on
foreign commercial paper issued in the United States.

      In addition to the above improvements, all estimates are revised as a
result of newly available or revised quarterly source data.  Revisions
attributable to these updated source data are for 2001-2003.  The net result of
revisions from all sources raised the value of U.S. assets abroad relative to
the value of foreign assets in the United States for recent years.

      A more detailed discussion of the U.S. net international investment
position in 2004 and revised historical data will appear in the July issue of
the Survey of Current Business.  That issue will also contain an article about
historical-cost direct investment positions, with detail by country and industry,
and revised direct investment historical data.

                             *          *          *

      BEA's major national, regional, international, and industry estimates;
the Survey of Current Business; and BEA news releases are available on BEA's
Web site at www.bea.gov.  By visiting the site, you can also subscribe to
receive free e-mail summaries of BEA releases and announcements.




    Table 1.--International Investment Position of the United States at Yearend, 2003 and 2004
    [millions of dollars]



                                                                                                                            Changes in position in 2004 (decrease (-), increase (+))

                                                                                                                            Attributable to:


                                                                                                                                                 Valuation adjustments
          Line               Type of investment
                                                                                                          Position,                                                               Position,
                                                                                                          2003/r/                             Exchange-                           2004/p/
                                                                                                                       Financial    Price       rate        Other
                                                                                                                         flows     changes    changes/1/   changes/2/   Total
                                                                                                                          (a)        (b)        (c)          (d)      (a+b+c+d)


                Net international investment position of the United States:
            1       With direct investment positions at current cost (line 3 less line 24)................-2,156,703   -584,597     57,253      190,726       9,102    -327,516  -2,484,219
            2       With direct investment positions at market value (line 4 less line 25)................-2,372,370   -584,597    146,514      272,278      -4,070    -169,875  -2,542,245

                  U.S.-owned assets abroad:
            3         With direct investment positions at current cost (lines 5+10+15).................... 7,640,986    855,508    227,413      228,630     100,259   1,411,810   9,052,796
            4         With direct investment positions at market value (lines 5+10+16).................... 8,296,638    855,508    430,698      308,239      81,700   1,676,145   9,972,783

            5       U.S. official reserve assets..........................................................   183,577     -2,805      5,061        3,738          20       6,014     189,591
            6         Gold................................................................................   108,866       ....   /3/5,061         ....       /4/20       5,081     113,947
            7         Special drawing rights..............................................................    12,638        398       ....          592        ....         990      13,628
            8         Reserve position in the International Monetary Fund.................................    22,535     -3,826       ....          835        ....      -2,991      19,544
            9         Foreign currencies..................................................................    39,538        623       ....        2,311        ....       2,934      42,472

           10       U.S. Government assets, other than official reserve assets............................    84,772     -1,216       ....         ....        ....      -1,216      83,556
           11         U.S. credits and other long-term assets /5/.........................................    81,980     -1,177       ....         ....        ....      -1,177      80,803
           12           Repayable in dollars..............................................................    81,706     -1,176       ....         ....        ....      -1,176      80,530
           13           Other /6/.........................................................................       274         -1       ....         ....        ....          -1         273
           14         U.S. foreign currency holdings and U.S. short-term assets...........................     2,792        -39       ....         ....        ....         -39       2,753

                    U.S. private assets:
           15           With direct investment at current cost (lines 17+19+22+23)........................ 7,372,637    859,529    222,352      224,892     100,239   1,407,012   8,779,649
           16           With direct investment at market value (lines 18+19+22+23)........................ 8,028,289    859,529    425,637      304,501      81,680   1,671,347   9,699,636

                      Direct investment abroad:
           17           At current cost................................................................... 2,062,551    252,012     10,195       36,787       5,841     304,835   2,367,386
           18           At market value................................................................... 2,718,203    252,012    213,480      116,396     -12,718     569,170   3,287,373
           19         Foreign securities.................................................................. 2,953,778    102,383    212,157      168,400        ....     482,940   3,436,718
           20           Bonds.............................................................................   874,356     19,180      2,088       21,031        ....      42,299     916,655
           21           Corporate stocks.................................................................. 2,079,422     83,203    210,069      147,369        ....     440,641   2,520,063
           22         U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.........   596,961    149,001       ....       10,575      44,999     204,575     801,536
           23         U.S. claims reported by U.S. banks, not included elsewhere.......................... 1,759,347    356,133       ....        9,130      49,399     414,662   2,174,009

                  Foreign-owned assets in the United States:
           24         With direct investment at current cost (lines 26+33)................................ 9,797,689  1,440,105    170,160       37,904      91,157   1,739,326  11,537,015
           25         With direct investment at market value (lines 26+34)................................10,669,008  1,440,105    284,184       35,961      85,770   1,846,020  12,515,028

           26       Foreign official assets in the United States.......................................... 1,567,124    394,710     -7,342         ....      27,500     414,868   1,981,992
           27         U.S. Government securities.......................................................... 1,192,242    311,133    -19,456         ....      15,658     307,335   1,499,577
           28           U.S. Treasury securities..........................................................   990,411    272,648    -16,010         ....      13,453     270,091   1,260,502
           29           Other.............................................................................   201,831     38,485     -3,446         ....       2,205      37,244     239,075
           30         Other U.S. Government liabilities /7/...............................................    16,627        488       ....         ....        ....         488      17,115
           31         U.S. liabilities reported by U.S. banks, not included elsewhere.....................   201,054     70,329       ....         ....          88      70,417     271,471
           32         Other foreign official assets.......................................................   157,201     12,760     12,114         ....      11,754      36,628     193,829

                    Other foreign assets:
           33           With direct investment at current cost (lines 35+37+38+41+42+43).................. 8,230,565  1,045,395    177,502       37,904      63,657   1,324,458   9,555,023
           34           With direct investment at market value (lines 36+37+38+41+42+43).................. 9,101,884  1,045,395    291,526       35,961      58,270   1,431,152  10,533,036

                      Direct investment in the United States:
           35           At current cost................................................................... 1,585,898    106,832      3,000        1,943      11,204     122,979   1,708,877
           36           At market value................................................................... 2,457,217    106,832    117,024         ....       5,817     229,673   2,686,890
           37         U.S. Treasury securities............................................................   543,209    106,958     -5,078         ....      -5,373      96,507     639,716
           38         U.S. securities other than U.S. Treasury securities................................. 3,408,113    369,793    179,580       24,171       6,140     579,684   3,987,797
           39           Corporate and other bonds......................................................... 1,707,206    309,258     12,475       24,171       6,140     352,044   2,059,250
           40           Corporate stocks.................................................................. 1,700,907     60,535    167,105         ....        ....     227,640   1,928,547
           41         U.S. currency.......................................................................   317,908     14,827       ....         ....        ....      14,827     332,735
           42         U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns....   454,317    124,358       ....        5,848      -3,265     126,941     581,258
           43         U.S. liabilities reported by U.S. banks, not included elsewhere..................... 1,921,120    322,627       ....        5,942      54,951     383,520   2,304,640

      p Preliminary.
      r Revised.
      1. Represents gains or losses on foreign-currency-denominated assets and liabilities due to their revaluation at current exchange rates.
      2. Includes changes in coverage, capital gains and losses of direct investment affiliates, and other adjustments to the value of assets and liabilities.
      3. Reflects changes in the value of the official gold stock due to fluctuations in the market price of gold.
      4. Reflects changes in gold stock from U.S. Treasury sales of gold medallions and commemorative and bullion coins; also reflects replenishment through open market purchases.
          These demonetizations/monetizations are not included in international transactions financial flows.
      5. Also includes paid-in capital subscriptions to international financial institutions and resources provided to foreigners under foreign assistance programs requiring
          repayment over several years. Excludes World War I debts that are not being serviced.
      6. Includes indebtedness that the borrower may contractually, or at its option, repay with its currency, with a third country's currency, or by delivery of materials or transfer
          of services.
      7. Primarily U.S. Government liabilities associated with military sales contracts and other transactions arranged with or through foreign official agencies.

      Source:  Bureau of Economic Analysis