First Quarter of 2013

The U.S. net international investment position at the end of the first quarter of 2013 was -$4,277.1 billion (preliminary) as the value of foreign investments in the United States exceeded the value of U.S. investments abroad. At the end of the fourth quarter of 2012, the U.S. net international investment position was -$3,863.9 billion (revised). The -$413.2 billion change in the net position reflected a $394.2 billion increase in the value of foreign-owned assets in the United States and a $19.0 billion decrease in the value of U.S.-owned assets abroad.

U.S.-owned assets abroad were $21,618.6 billion at the end of the first quarter compared with $21,637.6 billion at the end of the fourth quarter. The $19.0 billion decrease reflected a decrease of $373.9 billion in the value of financial derivatives that was mostly offset by an increase of $354.8 billion in the value of U.S.-owned assets abroad excluding financial derivatives.

U.S.-owned assets abroad excluding financial derivatives were $18,372.7 billion at the end of the first quarter compared with $18,017.9 billion at the end of the fourth quarter. The $354.8 billion increase reflected $218.8 billion in financial outflows and $136.1 billion in valuation changes.¹

Foreign-owned assets in the United States were $25,895.7 billion at the end of the first quarter compared with $25,501.5 billion at the end of the fourth quarter. The $394.2 billion increase reflected an increase of $749.3 billion in the value of foreign-owned assets in the United States excluding financial derivatives that was partly offset by a decrease of $355.1 billion in the value of financial derivatives.

Foreign-owned assets in the United States excluding financial derivatives were $22,688.8 billion at the end of the first quarter compared with $21,939.5 billion at the end of the fourth quarter. The $749.3 billion increase reflected $295.5 billion in financial inflows and $453.8 billion in valuation changes.

Year 2012

The U.S. net international investment position was -$3,863.9 billion (revised) at the end of 2012 compared with -$3,730.6 billion (revised) at the end of 2011. The -$133.3 billion change in the net position from the end of 2011 to the end of 2012 reflected a $134.8 billion increase in the value of foreign-owned assets in the United States that was slightly offset by a $1.5 billion increase in the value of U.S.-owned assets abroad.

• Highlights for 2012:
• Foreign acquisitions of U.S. assets exceeded U.S. acquisitions of foreign assets by $439.4 billion. Foreign acquisitions of U.S. assets were concentrated in U.S. securities, including $433.2 billion in acquisitions of U.S. Treasury securities by foreign official agencies and $156.4 billion in acquisitions by all other foreigners.
• Foreign acquisitions of U.S. assets and U.S. acquisitions of foreign assets were reduced by declines in both U.S. claims on and liabilities to foreigners reported by U.S. banks and securities brokers.
• The appreciation of foreign stock prices raised the value of U.S. holdings of foreign stocks abroad. Similarly, the appreciation of U.S. stock prices raised the value of foreign holdings of U.S stocks, but by a lower amount.
• The mixed performance of the U.S. dollar against major foreign currencies resulted in a $5.1 billion change in the U.S. net international investment position from exchange-rate changes.
• The -$188.6 billion in other changes mostly reflected the incorporation of newly available and revised source data.
• The U.S. net international investment position was equal to 2.3% of the value of all U.S. financial assets at the end of 2012, down from the peak of 2.4% at the end of 2011.²

Financial flows

Net financial flows of -$439.4 billion in 2012 resulted from U.S. acquisitions of financial assets abroad, excluding financial derivatives, of $97.5 billion, less foreign acquisitions of financial assets in the United States, excluding financial derivatives, of $543.9 billion, plus net financial outflows from financial derivatives of $7.1 billion.

U.S. acquisitions of financial assets abroad, excluding financial derivatives, were $97.5 billion, down from $452.3 billion in 2011. In 2012, U.S. purchases of foreign securities exceeded sales, and U.S. official reserve assets, direct investment abroad, and claims of U.S. nonbanks on foreign residents increased. These financial outflows were partly offset by decreases in U.S. government assets other than official reserve assets and relatively large decreases ($380.5 billion) in claims of U.S. banks and securities brokers on foreign residents.

Foreign acquisitions of financial assets in the United States, excluding financial derivatives, were $543.9 billion, down from $969.0 billion in 2011. In 2012, foreign private purchases of U.S. securities including U.S. Treasury securities exceeded sales. Foreign official assets, direct investment in the United States, and holdings of U.S. currency increased. These financial inflows were partly offset by relatively large decreases ($387.4 billion) in liabilities of U.S. banks and securities brokers and decreases in liabilities of U.S nonbanks to foreign residents.

Valuation adjustments

Valuation adjustments for 2012 included $489.6 billion in price changes, $5.1 billion in exchange-rate changes, and -$188.6 billion in other changes.

Price changes led to a $489.6 billion change in the U.S. net international investment position, mostly reflecting price increases of foreign stocks and bonds that exceeded price increases of U.S. stocks and corporate bonds. Price increases of U.S. stocks and corporate bonds were partly offset by price decreases of U.S. Treasury securities and agency securities, such as debt issued by government sponsored enterprises like Fannie Mae and Freddie Mac.

Exchange-rate changes led to a $5.1 billion change in the U.S. net international investment position as exchange-rate changes raised the dollar value of U.S.-owned assets abroad more than they raised the dollar value of foreign-owned assets in the United States denominated in foreign currencies. The small exchange-rate changes reflected the mixed performance of the U.S. dollar against major foreign currencies from yearend 2011 to yearend 2012.

Other changes led to a -$188.6 billion change in the U.S. net international investment position. These changes reflected the incorporation of newly available source data on aggregate holdings of long-term securities by U.S. and foreign residents from the Treasury International Capital reporting system (TIC), more complete TIC reporting of the nonbanking and banking data, capital gains and losses from the sale of direct investment assets, and other adjustments to source data. (See the Annual Revisions section for more information on the TIC source data.)

Investment positions at the end of 2012

U.S.-owned assets abroad were $21,637.6 billion at the end of 2012 compared with $21,636.2 billion at the end of 2011. The $1.5 billion increase reflected a $1,098.3 billion increase in the value of U.S.-owned assets abroad excluding financial derivatives that was nearly offset by a $1,096.8 billion decrease in the value of financial derivatives.

Financial derivatives held as assets were $3,619.8 billion at the end of 2012 compared with $4,716.6 billion at the end of 2011. The $1,096.8 billion decrease was mainly due to decreases in U.S. claims in single-currency interest rate swaps.

U.S. official reserve assets were $572.4 billion at the end of 2012 compared with $537.0 billion at the end of 2011. The $35.3 billion increase reflected price appreciation of U.S. government gold and the increased U.S. reserve position in the International Monetary Fund. These increases were partly offset by a small decrease in the value of government foreign currency holdings resulting mostly from exchange-rate changes.

U.S. government assets other than official reserve assets were $93.6 billion at the end of 2012 compared with $178.9 billion at the end of 2011. The $85.3 billion decrease was mainly a result of decreases in U.S. foreign currency holdings due to central bank liquidity swaps between the U.S. Federal Reserve System and foreign central banks.

The stock of U.S. direct investment abroad at current cost was $5,077.8 billion at the end of 2012 compared with $4,663.1 billion at the end of 2011. The $414.6 billion increase reflected financial outflows of $388.3 billion that were mostly accounted for by reinvested earnings.

U.S. holdings of foreign securities were $7,531.2 billion at the end of 2012 compared with $6,441.4 billion at the end of 2011. The $1,089.9 billion increase was mostly attributable to price increases of foreign stocks.

Claims on foreigners reported by U.S. nonbanks were $844.8 billion at the end of 2012 compared with $793.0 billion at the end of 2011.

Claims on foreigners reported by U.S. banks and securities brokers were $3,898.2 billion at the end of 2012 compared with $4,306.2 billion at the end of 2011.

Foreign-owned assets in the United States were $25,501.5 billion at the end of 2012 compared with $25,366.7 billion at the end of 2011. The $134.8 billion increase reflected a $1,203.3 billion increase in the value of foreign-owned assets in the United States excluding financial derivatives that was mostly offset by a $1,068.6 billion decrease in the value of financial derivatives.

Financial derivatives held as liabilities were $3,562.0 billion at the end of 2012 compared with $4,630.5 billion at the end of 2011. The $1,068.6 billion decrease was mainly due to decreases in U.S. liabilities in single-currency interest rate swaps.

Foreign official assets in the United States were $5,692.4 billion at the end of 2012 compared with $5,256.4 billion at the end of 2011. The $436.1 billion increase was mostly a result of net purchases of U.S. Treasury securities along with corporate bonds and stocks that were partly offset by net sales of agency bonds.

The stock of foreign direct investment in the United States at current cost was $3,057.3 billion at the end of 2012 compared with $2,879.5 billion at the end of 2011. The $177.8 billion increase was mainly due to financial inflows that were mostly accounted for by unusually large reinvested earnings.

Foreign private holdings of U.S. Treasury securities were $1,541.6 billion at the end of 2012 compared with $1,386.3 billion at the end of 2011. The $155.3 billion increase was mostly a result of net purchases.

Foreign private holdings of U.S. securities other than U.S. Treasury securities were $6,904.1 billion at the end of 2012 compared with $6,151.6 billion at the end of 2011. The $752.5 billion increase was mostly attributable to price increases of U.S. stocks and to net purchases.

The stock of U.S. currency abroad was $454.2 billion at the end of 2012 compared with $397.1 billion at the end of 2011.

Liabilities to private foreign residents reported by U.S. nonbanks were $656.5 billion at the end of 2012 compared with $630.9 billion at the end of 2011.

Liabilities to private foreign residents reported by U.S. banks and securities brokers were $3,633.4 billion at the end of 2012 compared with $4,034.5 billion at the end of 2011.

Annual Revisions

The U.S. international investment position statistics released today have been revised for the first quarter of 2009 to the fourth quarter of 2012. The revisions reflect newly available data from three Treasury International Capital (TIC) surveys conducted by the Federal Reserve Board and the U.S. Department of the Treasury: Aggregate Holdings of Long-Term Securities by U.S. and Foreign Residents (SLT), the Benchmark Survey of U.S. Ownership of Foreign Securities (SHC) at end-December 2011, and the Annual Survey of Foreign Portfolio Holdings of U.S. Securities (SHLA) at end-June 2012. The SLT is a new monthly report that surveys U.S. custodians, issuers of U.S. securities, and U.S. end-investors to obtain cross-border holdings of U.S. and foreign equity and long-term debt securities by country. BEA has incorporated these new data beginning with position statistics for the end of 2011. The new SLT data have allowed BEA to improve its quarterly position statistics and related financial flow and income statistics for long-term securities.

Revisions to the U.S. international investment position statistics also reflect other newly available and revised data from the TIC reporting system and from BEA’s surveys of direct investment including the 2009 Benchmark Survey of U.S. Direct Investment Abroad.

Revisions to the quarterly U.S. net international investment position averaged 1.6% for 2009, 3.8% for 2010, 9.1% for 2011, and 9.6% for 2012. Revisions are largest in the third and the fourth quarters of 2012. The net investment position at yearend 2012 is revised by $552.4 billion, becoming less negative, reflecting upward revisions to U.S. assets abroad that exceeded upward revisions to foreign-owned assets in the United States.

On a yearend basis, the U.S. net international investment position is revised by $46.6 billion, becoming less negative for yearend 2009, $223.3 billion for yearend 2010, $299.7 billion for yearend 2011, and $552.4 billion for yearend 2012.

• U.S.-owned assets abroad at yearend 2009 are revised upward $46.8 billion mostly as a result of the incorporation of BEA’s 2009 Benchmark Survey of U.S. Direct Investment Abroad.
• U.S.-owned assets abroad are revised upward $256.6 billion for yearend 2010, $503.8 billion for yearend 2011, and $877.5 billion for yearend 2012, reflecting large revisions to U.S. holdings of foreign securities, mostly as a result of BEA’s incorporation of the new SLT survey data.
• Foreign-owned assets in the United States at yearend 2009 are virtually unrevised. They are revised upward $33.3 billion for yearend 2010, mostly as a result of revisions to foreign direct investment in the United States.
• Foreign-owned assets in the United States are revised upward $204.1 billion for yearend 2011 and $325.2 billion for yearend 2012, reflecting revisions to foreign holdings of U.S. securities, mostly as a result of BEA’s incorporation of the new SLT survey data.

The July SURVEY OF CURRENT BUSINESS will contain an article with a more detailed discussion of the international investment position statistics for the first quarter of 2013, annual statistics for 2012, and revised historical data. That issue will also contain an article about direct investment positions valued at historical-cost and revised historical data on direct investment with detail by country and industry.

Valuing the Components of the U.S. International Investment Position

Investment positions for long-term portfolio securities are based on market values from monthly, annual, and benchmark surveys conducted by the Treasury International Capital (TIC) reporting system of the U.S. Department of the Treasury. Investment positions for financial derivatives are based on fair market values from quarterly surveys conducted by the TIC reporting system. Investment positions for claims and liabilities reported by banks, securities brokers, and other nonbanks are based on contractual (face) values of instruments as reported by financial institutions for both their own accounts and the accounts of their customers on the monthly and quarterly surveys conducted by the TIC reporting system with supplementary data for U.S. nonbanks from foreign central banks.

Investment positions for direct investment are valued at current-period prices based on a revaluation of book values. Book values are reported by U.S. multinational companies on surveys conducted by BEA. Direct investment at current cost is BEA’s featured measure of direct investment at current-period prices.³ The current-cost method values the U.S. and foreign parent shares of their affiliates’ investment in (1) plant and equipment using the current cost of capital equipment, (2) land using general price indexes, and (3) inventories using estimates of their replacement cost.⁴

Release dates in 2013:

BEA’s national, international, regional, and industry statistics; the Survey of Current Business; and BEA news releases are available without charge at www.bea.gov. At the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

NOTE: This news release is available on BEA’s Web site www.bea.gov along with Quarterly Highlights and Annual Highlights related to this release, the latest detailed statistics for the U.S. international investment position, and a description of the estimation methods used to compile them. The first-quarter statistics for 2013 in this release are preliminary and will be revised on September 24, 2013.

¹ For statistics on financial flows, see the financial account transactions of the U.S. International Transactions Accounts in Table 1. Detailed valuation changes such as price, exchange-rate, and other changes are available only for the annual statistics.

² Board of Governors of the Federal Reserve System (FRS), Flow of Funds Accounts of the United States, Flows and Outstandings, First Quarter 2013, Release Z.1. Statistical Release (Washington, DC: FRS, June 6, 2013) Table L.5, page 11. According to June 2013 Z.1 release, the value of all U.S. financial assets was $168,691.8 billion at the end of 2012. U.S. assets abroad from the international investment position were $21,637.6 billion at the end of 2012, 12.8% of all U.S. assets, down from 13.7% in 2011 and from the 13.8% series peak in 2008.

³ BEA publishes direct investment at market value as an alternative current-period price measure with owners’ equity revalued using indexes of stock market prices. BEA also publishes direct investment at historical cost with owners’ equity at the book value reported on BEA’s surveys. Country and industry detail for direct investment are available only on a historical-cost basis see (/iTable/index_MNC.cfm).

⁴ For additional information on the current-cost and market-value methods, see J. Steven Landefeld and Ann M. Lawson, “Valuation of the U.S. Net International Investment Position,” Survey of Current Business 71 (May 1991): 40–49.