News Release
U.S. International Investment Position, 2005
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Elena L. Nguyen: (202) 606-9555 BEA 06-29 Christopher A. Gohrband: (202) 606-9564 U.S. Net International Investment Position at Yearend 2005 The U.S. net international investment position at yearend 2005 was -$2,693.8 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 2004, the U.S. net international investment position was -$2,360.8 billion (revised). The -$333.0 billion change in the net investment position from yearend 2004 to yearend 2005 was largely due to record private net foreign purchases of U.S. securities, including U.S. Treasury securities, and to depreciation of most major foreign currencies against the U.S. dollar, which lowered the dollar value of U.S.-owned assets abroad. The impact of these net purchases and exchange-rate changes was largely offset by price appreciation of U.S.-held foreign stocks that surpassed by a large amount price appreciation of foreign-held U.S. stocks. With direct investment valued at the current stock market value of owners' equity, the net investment position was -$2,546.2 billion (preliminary) at yearend 2005, compared with -$2,448.7 billion (revised) at yearend 2004. The -$97.4 billion change in the net investment position on this basis resulted from the same factors as above. Price increases on direct investment were larger on this basis than with direct investment valued at current cost. Other highlights include: Foreign acquisitions of assets in the United States were $1,212.3 billion in 2005, down from $1,450.2 billion in 2004. Foreign official acquisitions were $199.5 billion, down from last year's record $387.8 billion, as a result of sharply reduced net purchases of U.S. Treasury securities. Partly offsetting were stronger private net foreign purchases of U.S. securities, including U.S. Treasury securities. Net private foreign purchases of U.S. Treasury securities were a record $199.5 billion, up from $102.9 billion. Net private foreign purchases of U.S. securities other than U.S. Treasury securities were a record $474.1 billion, up from $381.5 billion in 2004, of which net purchases of U.S. bonds were $388.4 billion, up from $321.9 billion, and net purchases of U.S. stocks were $85.8 billion, up from $59.5 billion. U.S. banks' liabilities increased $179.8 billion, down from last year's increase of $336.7 billion, and U.S. nonbanks' liabilities increased $30.1 billion, down from $93.3 billion. Foreign direct investment in the United States increased $109.8 billion, down from an increase of $133.2 billion. U.S. acquisitions of assets abroad were $426.8 billion in 2005, down from a record $867.8 billion in 2004, as U.S. direct investment abroad and U.S. banks' and nonbanks' claims slowed sharply from last year's pace. U.S. direct investment abroad increased only $9.1 billion, down from an increase of $244.1 billion in 2004. U.S. banks' claims increased $213.0 billion, down from an increase of $361.6 billion in 2004, and U.S. nonbanks' claims increased $44.2 billion, down from an increase of $120.0 billion. In contrast, net U.S. purchases of foreign securities, mostly foreign stocks, increased to $180.1 billion from $146.5 billion. Price appreciation in most foreign stock markets substantially increased the value of U.S. holdings of foreign corporate stocks and the value of owners' equity of U.S. direct investment abroad on a market-value basis. Price appreciation in the U.S. stock market also increased the value of foreign holdings of U.S. corporate stocks, but by a much smaller amount. Depreciation of most major foreign currencies against the U.S. dollar from yearend 2004 to yearend 2005 lowered the dollar value of U.S.-owned assets abroad, especially the value of U.S.-owned foreign corporate stocks and U.S. direct investment abroad at market value. ______________________________________________________________________________ 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 $822.0 billion to $10,008.7 billion with U.S. direct investment abroad valued at current cost, and they increased $1,003.9 billion to $11,079.2 billion with U.S. direct investment abroad valued at market value. U.S. holdings of foreign securities increased $520.6 billion to $4,074.0 billion. Holdings of foreign stocks increased as a result of large price appreciation and record net U.S. purchases, which were partly offset by exchange-rate depreciation. Holdings of foreign bonds decreased as a result of price depreciation and exchange-rate depreciation that more than offset net U.S. purchases. U.S. direct investment abroad valued at current cost increased $54.7 billion to $2,453.9 billion, mostly as a result of price appreciation. Financial transactions increased U.S. direct investment abroad $9.1 billion, down sharply from last year's increase of $244.1 billion, largely as a result of tax incentives provided by the American Jobs Creation Act that encouraged the payment of dividends by foreign affiliates to their U.S. parent companies. At market value, U.S. direct investment abroad increased $236.6 billion to $3,524.5 billion, reflecting strong price appreciation of owners' equity resulting from an increase in foreign stock prices. Partly offsetting was exchange-rate depreciation. Claims on foreigners reported by U.S. banks increased $202.8 billion to $2,430.7 billion. Claims on unaffiliated foreigners reported by U.S. nonbanking concerns increased $51.0 billion to $784.5 billion. U.S. official reserve assets decreased $1.5 billion to $188.0 billion. Foreign-owned assets in the United States increased $1,155.0 billion to $12,702.5 billion with foreign direct investment in the United States valued at current cost, and they increased $1,101.3 billion to $13,625.4 billion with foreign direct investment in the United States valued at market value. Foreign official assets in the United States increased $214.7 billion to $2,216.1 billion. Net purchases of U.S. Government securities accounted for most of the increase. Foreign holdings of U.S. securities other than U.S. Treasury securities, excluding official holdings, increased $395.2 billion to $4,390.7 billion. Foreign holdings of U.S. bonds increased as a result of strong net foreign purchases, which were partly offset by price depreciation. Foreign holdings of U.S. stocks increased as a result of net foreign purchases and price appreciation. Foreign holdings of U.S. Treasury securities, excluding official holdings, increased $142.6 billion to $704.9 billion as a result of strong net foreign purchases. U.S. liabilities to private foreigners and international financial institutions reported by U.S. banks increased $179.9 billion to $2,600.6 billion. Liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns increased $56.1 billion to $563.7 billion. Foreign direct investment in the United States valued at current cost increased $147.2 billion to $1,874.3 billion, mostly as a result of financial transactions. At market value, foreign direct investment in the United States increased $93.5 billion to $2,797.2 billion. U.S. currency held by foreigners increased $19.4 billion to $352.2 billion. * * * Revisions The previously published net international investment position in 2004 was -$2,484.2 billion with direct investment at current cost and -$2,542.2 billion with direct investment at market value. This year, the estimates of U.S. holdings of foreign securities for 2003-2004 were revised to incorporate results from the U.S. Treasury Department's Annual Survey of U.S. Portfolio Investment Abroad as of December 31, 2004. The estimates of foreign holdings of U.S. securities for 2003-2004 were revised to incorporate results from the U.S. Treasury Department's Annual Survey of Foreign Portfolio Investment in the United States as of June 30, 2005. These estimates also included the incorporation of revised 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 short-term U.S. Treasury securities and other short-term instruments reported by U.S. banks for 2003-2004 were also revised to incorporate results from the U.S. Treasury Department's Annual Survey of Foreign Portfolio Investment in the United States as of June 30, 2005. The estimates of foreign direct investment in the United States for 2002-2004 were revised to incorporate results from BEA's benchmark survey of foreign direct investment in the United States for 2002. 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 2002-2004. 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 2002-2004. A more detailed discussion of the U.S. net international investment position in 2005 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 national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge 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, 2004 and 2005 [Millions of dollars] Changes in position in 2005 (decrease (-), increase (+)) Attributable to: Valuation adjustments Line Type of investment Position, Position, 2004/r/ Exchange- 2005/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)............ -2,360,785 -785,449 625,441 -226,283 53,277 -333,014 -2,693,799 2 With direct investment positions at market value (line 4 less line 25)............ -2,448,744 -785,449 1,061,360 -393,614 20,272 -97,431 -2,546,175 U.S.-owned assets abroad: 3 With direct investment positions at current cost (lines 5+10+15)................ 9,186,661 426,801 608,509 -278,993 65,698 822,015 10,008,676 4 With direct investment positions at market value (lines 5+10+16)................ 10,075,337 426,801 993,566 -444,317 27,815 1,003,865 11,079,202 5 U.S. official reserve assets...................................................... 189,591 -14,096 20,241 -7,680 -13 -1,548 188,043 6 Gold............................................................................ 113,947 .... /3/20,241 .... /4/-13 20,228 134,175 7 Special drawing rights.......................................................... 13,628 -4,511 .... -907 .... -5,418 8,210 8 Reserve position in the International Monetary Fund............................. 19,544 -10,200 .... -1,308 .... -11,508 8,036 9 Foreign currencies.............................................................. 42,472 615 .... -5,465 .... -4,850 37,622 10 U.S. Government assets, other than official reserve assets........................ 83,062 -5,539 .... .... .... -5,539 77,523 11 U.S. credits and other long-term assets /5/..................................... 80,308 -3,348 .... .... .... -3,348 76,960 12 Repayable in dollars.......................................................... 80,035 -3,348 .... .... .... -3,348 76,687 13 Other /6/..................................................................... 273 .... .... .... .... .... 273 14 U.S. foreign currency holdings and U.S. short-term assets....................... 2,754 -2,191 .... .... .... -2,191 563 U.S. private assets: 15 With direct investment at current cost (lines 17+19+22+23).................... 8,914,008 446,436 588,268 -271,313 65,711 829,102 9,743,110 16 With direct investment at market value (lines 18+19+22+23).................... 9,802,684 446,436 973,325 -436,637 27,828 1,010,952 10,813,636 Direct investment abroad: 17 At current cost............................................................... 2,399,224 9,072 42,085 -32,112 35,664 54,709 2,453,933 18 At market value............................................................... 3,287,900 9,072 427,142 -197,436 -2,219 236,559 3,524,459 19 Foreign securities.............................................................. 3,553,387 180,125 546,183 -205,698 .... 520,610 4,073,997 20 Bonds......................................................................... 992,969 37,991 -20,533 -22,884 .... -5,426 987,543 21 Corporate stocks.............................................................. 2,560,418 142,134 566,716 -182,814 .... 526,036 3,086,454 22 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns..... 733,538 44,221 .... -18,151 24,913 50,983 784,521 23 U.S. claims reported by U.S. banks, not included elsewhere...................... 2,227,859 213,018 .... -15,352 5,134 202,800 2,430,659 Foreign-owned assets in the United States: 24 With direct investment at current cost (lines 26+33)............................ 11,547,446 1,212,250 -16,932 -52,710 12,421 1,155,029 12,702,475 25 With direct investment at market value (lines 26+34)............................ 12,524,081 1,212,250 -67,794 -50,703 7,543 1,101,296 13,625,377 26 Foreign official assets in the United States...................................... 2,001,407 199,495 -26,059 .... 41,280 214,716 2,216,123 27 U.S. Government securities...................................................... 1,499,293 156,450 -28,661 .... 22,315 150,104 1,649,397 28 U.S. Treasury securities...................................................... 1,241,250 71,749 -21,682 .... -2,436 47,631 1,288,881 29 Other......................................................................... 258,043 84,701 -6,979 .... 24,751 102,473 360,516 30 Other U.S. Government liabilities /7/........................................... 16,488 -488 .... .... .... -488 16,000 31 U.S. liabilities reported by U.S. banks, not included elsewhere................. 270,387 24,275 .... .... .... 24,275 294,662 32 Other foreign official assets................................................... 215,239 19,258 2,602 .... 18,965 40,825 256,064 Other foreign assets: 33 With direct investment at current cost (lines 35+37+38+41+42+43).............. 9,546,039 1,012,755 9,127 -52,710 -28,859 940,313 10,486,352 34 With direct investment at market value (lines 36+37+38+41+42+43).............. 10,522,674 1,012,755 -41,735 -50,703 -33,737 886,580 11,409,254 Direct investment in the United States: 35 At current cost............................................................... 1,727,062 109,754 27,950 -2,007 11,504 147,201 1,874,263 36 At market value............................................................... 2,703,697 109,754 -22,912 .... 6,626 93,468 2,797,165 37 U.S. Treasury securities........................................................ 562,288 199,491 -7,671 .... -49,233 142,587 704,875 38 U.S. securities other than U.S. Treasury securities............................. 3,995,506 474,140 -11,152 -29,411 -38,401 395,176 4,390,682 39 Corporate and other bonds..................................................... 2,035,149 388,357 -72,646 -29,411 -46,252 240,048 2,275,197 40 Corporate stocks.............................................................. 1,960,357 85,783 61,494 .... 7,851 155,128 2,115,485 41 U.S.currency.................................................................... 332,735 19,416 .... .... .... 19,416 352,151 42 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns 507,668 30,105 .... -10,309 36,285 56,081 563,749 43 U.S. liabilities reported by U.S. banks, not included elsewhere................. 2,420,780 179,849 .... -10,983 10,986 179,852 2,600,632 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