News Release

EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, Thursday, June 16, 2016
BEA 16-29

U.S. International Transactions, 1st quarter 2016 and Annual Revisions

                                 Current Account Balance

The U.S. current-account deficit—a net measure of transactions between the United States and
the rest of the world in goods, services, primary income, and secondary income—increased to
$124.7 billion (preliminary) in the first quarter of 2016 from $113.4 billion (revised) in the
fourth quarter of 2015, according to statistics released by the Bureau of Economic Analysis (BEA).
The deficit increased to 2.7 percent of current-dollar gross domestic product (GDP) from 2.5
percent in the fourth quarter.

The $11.3 billion increase reflected a $9.6 billion decrease in the surplus on primary income
to $37.5 billion and a $4.0 billion increase in the deficit on secondary income to $40.3 billion.
These changes were partly offset by a $2.0 billion decrease in the deficit on goods to $186.4
billion and a $0.4 billion increase in the surplus on services to $64.6 billion.
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  Notice About Tables Included in the News Release of the International Transactions Accounts

BEA is increasing the number of tables published in the news release of the International
Transactions Accounts. This news release includes tables with additional details for the current
account and financial account:

Table 1. U.S. International Transactions                                      page  8
Table 2. U.S. International Trade in Goods                                         10
Table 3. U.S. International Trade in Services                                      14
Table 4. U.S. International Transactions in Primary Income                         16
Table 5. U.S. International Transactions in Secondary Income                       17
Table 6. U.S. International Financial Transactions for Direct Investment           18
Table 7. U.S. International Financial Transactions for Portfolio Investment        20
Table 8. U.S. International Financial Transactions for Other Investment            22
Table 9. Revisions to U.S. International Transactions                              24

The statistics in tables 1-8 are available in BEA's Interactive Web Application.
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                           Current Account Transactions (tables 1-5)

The current account records transactions in international trade in goods and services and receipts
and payments of primary and secondary income. Primary income includes investment income— income
receipts from foreigners on U.S. holdings of financial assets abroad and income payments to
foreigners on U.S. liabilities—and compensation of employees—receipts for compensation of U.S.
residents paid by nonresidents and payments for compensation of foreign residents paid by U.S.
residents. Secondary income receipts and 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.

Exports of goods and services and income receipts

Exports of goods and services and income receipts decreased $8.0 billion in the first quarter
to $768.2 billion. An $11.2 billion decrease in good exports to $354.0 billion, which included
decreases in industrial supplies and materials, primarily petroleum and products, and in capital
goods except automotive, more than accounted for the overall decrease. Partly offsetting increases
included:

  * A $2.2 billion increase in primary income receipts to $194.3 billion, primarily reflecting
    an increase in portfolio investment income that more than offset a decrease in direct investment
    income

  * A $1.1 billion increase in services exports to $188.1 billion that was more than accounted
    for by an increase in travel (for all purposes including education).

Imports of goods and services and income payments

Imports of goods and services and income payments increased $3.3 billion to $892.9 billion.
Contributing to the increase were:

  * An $11.8 billion increase in primary income payments to $156.8 billion, which included increases
    in direct investment income, portfolio investment income, and other investment income

  * A $3.9 billion increase in secondary income payments to $72.1 billion, which mostly reflected
    an increase in U.S. government transfers

  * A $0.7 billion increase in services imports to $123.5 billion, which primarily reflected an
    increase in travel (for all purposes including education).

A $13.2 billion decrease in goods imports to $540.5 billion, which primarily reflected decreases
in industrial supplies and materials, primarily petroleum and products, and in capital goods
except automotive, was partly offsetting.

                           Financial Account (tables 1, 6, 7, and 8)

The financial account records transactions between U.S. residents and nonresidents for direct
investment (equity and debt instruments), portfolio investment (equity and investment fund
shares and debt securities), other investment (currency and deposits, loans, insurance technical
reserves, and trade credit and advances), reserves (assets only), and financial derivatives
other than reserves.

Net U.S. borrowing measured by financial account transactions was $35.0 billion in the first
quarter, a $13.3 billion increase from net borrowing of $21.8 billion in the fourth quarter.
A shift from net U.S. repayment to net U.S. incurrence of liabilities excluding financial
derivatives more than offset a shift to net U.S. acquisition of assets excluding financial
derivatives. Net transactions in financial derivatives other than reserves reflected more net
lending in the first quarter than in the fourth quarter.

Financial assets

Transactions in financial assets excluding financial derivatives shifted $219.3 billion to net
U.S. acquisition of $66.8 billion. Contributions to the shift included:

  * A $161.9 billion shift in transactions in other investment assets to net acquisition of
    $36.7 billion, which reflected a shift to net acquisition of deposits in currency and
    deposits and decrease in net foreign repayment of loans

  * A $60.7 billion decrease in net U.S. sales of portfolio investment assets to $61.6 billion,
    which mainly reflected a shift to net purchases of short-term debt securities.

A $3.1 billion decrease in net acquisition of direct investment assets, reflecting a decrease
in net acquisition of debt instruments that exceeded an increase in equity investment, moderated
the overall shift to net acquisition of assets.

Liabilities

Transactions in liabilities excluding financial derivatives shifted $233.8 billion to net U.S.
incurrence of $115.5 billion. Contributions to the shift included:

  * A $213.6 billion shift in transactions in other investment liabilities to net U.S. incurrence
    of $50.4 billion, which primarily reflected a shift to net incurrence of liabilities in loans

  * A $53.1 billion increase in transactions in direct investment liabilities to net incurrence
    of $79.9 billion, which reflected a shift to net U.S. incurrence of liabilities in debt
    instruments and an increase in equity investment by foreigners.

Transactions in portfolio investment liabilities shifted $32.9 billion to net foreign sales of
$14.8 billion, partly offsetting the changes in direct investment and other investment. Net
foreign purchases of debt securities decreased more than net foreign sales of equity and investment
fund shares.

Financial derivatives

Transactions in financial derivatives other than reserves reflected first-quarter net lending
of $13.6 billion, a $1.3 billion increase from the fourth quarter. Transactions in financial
derivatives are only available as a net value equal to transactions for assets less transactions
for liabilities. A positive value represents net cash payments by U.S. residents to foreign
residents from settlements of derivatives contracts (net lending) and a negative value represents
net U.S. cash receipts (net borrowing).

                               Statistical Discrepancy (table 1)

The statistical discrepancy is the difference between net acquisition of 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.

The statistical discrepancy decreased $2.0 billion in the first quarter to $89.6 billion.

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                                           Revisions

The statistics of the U.S. international transactions accounts released today have been revised
for the first quarter of 2012 to the fourth quarter of 2015 to incorporate newly available and
revised source data, improved estimation methodologies, and updated seasonal adjustments. Key
changes introduced in this annual revision are summarized below and in table A.

Newly available and revised source data

  * Goods exports and imports are revised for 2013-2015 primarily to reflect revised Census
    Bureau data on goods exports and imports and BEA data on balance of payments adjustments.

  * Services exports and imports are revised for 2013-2015 primarily to reflect newly available
    and revised data from BEA’s quarterly international services surveys and the results of BEA’s
    2014 Benchmark Survey of Financial Services Transactions between U.S. Financial Services
    Providers and Foreign Persons. For travel and transport, exports are revised to reflect
    newly available and revised data from U.S. Customs and Border Protection on the number of
    foreign residents traveling in the United States.

  * Secondary income receipts and payments are revised for 2012-2015 primarily to incorporate
    newly available and revised source data from the Internal Revenue Service, BEA’s international
    insurance surveys, and other sources.

  * Financial asset and liability transactions as well as primary income receipts and payments
    related to inward direct investment are revised for 2012-2015 to incorporate the results of
    BEA’s 2012 Benchmark Survey of Foreign Direct Investment in the United States and newly
    available and revised data from BEA’s quarterly and annual direct investment surveys. Financial
    asset and liability transactions and primary income receipts and payments related to outward
    direct investment are also revised for 2013-2015 to incorporate newly available and revised
    data from BEA’s quarterly and annual direct investment surveys.

  * Financial asset and liability transactions as well as primary income receipts and payments
    related to portfolio investment are revised for 2012-2015 to incorporate newly available
    and revised data from the U.S. Department of the Treasury from these Treasury International
    Capital (TIC) surveys:
      o Aggregate Holdings of Long-Term Securities by U.S. and Foreign Residents
      o Foreign-residents’ Holdings of U.S. Securities, including Selected Money Market Instruments
      o Report of U.S. Ownership of Foreign Securities, including Selected Money Market Instruments

  * Financial asset and liability transactions and primary income receipts and payments related
    to other investment are revised for 2012-2015 to incorporate revisions from several sources.
      o Revisions for 2014-2015 incorporate newly available and revised data from these TIC
        surveys:
        * Reports by Financial Institutions of Liabilities to, and Claims on, Foreign Residents
          by U.S. Residents
          covering debt liabilities and claims, excluding long-term debt securities
        * Reports of Liabilities to, and Claims on, Unaffiliated Foreign Residents by U.S.
          Resident Non-Financial Institutions
          covering debt liabilities and claims, excluding long-term debt securities.

      o Revisions for 2012-2015 also incorporate newly available and revised data on transactions
        of U.S. financial intermediaries with foreign financial intermediaries from BEA’s benchmark,
        quarterly, and annual direct investment surveys that are recorded in other investment.

      o Revisions for 2013-2015 incorporate newly available and revised U.S. government administrative
        data.

  * Financial transactions in financial derivatives are revised for 2013-2015 to incorporate
    newly available and revised data from the TIC survey Report of Holdings of, and Transactions
    in, Financial Derivatives Contracts with Foreign Residents.

Improved estimation methodologies

  * Revised statistics on trade in travel services reflect a refinement to the methodology for
    estimating average expenditures by travelers.

  * Revised statistics in portfolio and other investment financial asset and liability transactions
    reflect a refinement to the methodology for estimating transactions in foreign-currency
    denominated deposits, loans, short-term securities, and negotiable certificates of deposit.

A more detailed discussion of the revisions to source data for travel and transport services
exports, the refinement of the methodology for estimating average expenditures by travelers,
and the incorporation of results from benchmark surveys on financial services transactions and
foreign direct investment in the United States appears in “Preview of the 2016 Annual Revision
of the International Economic Accounts,” in the May issue of the SURVEY OF CURRENT BUSINESS.
Additional information on the revisions to the U.S. International Transactions Accounts and the
U.S. International Investment Position Accounts, including a discussion of the refinement of
the methodology for estimating transactions in foreign-currency denominated assets and liabilities,
will be provided in the July issue of the SURVEY OF CURRENT BUSINESS.

Revisions to fourth quarter 2015

       Revisions to Fourth-Quarter 2015 International Transactions Accounts Aggregates
                         [Billions of dollars, seasonally adjusted]

                                                                       Estimate
                                                        Preliminary                Revised
    Current-account balance                                  -125.3                 -113.4
       Goods balance                                         -187.3                 -188.4
       Services balance                                        53.5                   64.2
       Primary-income balance                                  42.8                   47.1
       Secondary-income balance                               -34.3                  -36.3
    Net lending from financial-account transactions           -29.4                  -21.8
    Statistical discrepancy                                    95.9                   91.6

The first-quarter statistics in this release are preliminary and will be revised on September 15, 2016.

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             Next release:  U.S. International Transactions, Second Quarter 2016
                             September 15, 2016 at 8:30 A.M. EDT

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