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EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, Thursday, June 20, 2019

BEA 19-26

U.S. International Transactions, First Quarter 2019 and Annual Update

Current-Account Balance

The U.S. current-account deficit decreased to $130.4 billion (preliminary) in the first quarter of 2019 from $143.9 billion (revised) in the fourth quarter of 2018, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit was 2.5 percent of current-dollar gross domestic product in the first quarter, down from 2.8 percent in the fourth quarter.

Quarterly U.S. Current-Account and Component Balances

The $13.5 billion decrease in the current-account deficit mostly reflected a decrease in the deficit on goods that was partly offset by an increase in the deficit on secondary income.

Quarterly U.S. Current-Account Transactions

Current-Account Transactions (tables 1-5)

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $7.2 billion in the first quarter to $945.9 billion.

Primary income receipts increased $5.3 billion to $281.8 billion, primarily reflecting increases in direct investment income and in other investment income. A decrease in portfolio investment income partly offset the increases. For more information on direct investment income, see "Effects of the 2017 Tax Cuts and Jobs Act on Components of the International Transactions Accounts."
Goods exports increased $2.4 billion to $419.3 billion, primarily reflecting increases in automotive vehicles, parts, and engines, mostly passenger cars, and in foods, feeds, and beverages, mainly soybeans. A decrease in industrial supplies and materials partly offset the increases.
Services exports increased $2.3 billion to $209.1 billion, primarily reflecting an increase in travel (for all purposes including education), mostly personal travel.
Secondary income receipts decreased $2.8 billion to $35.6 billion, reflecting decreases in both private and U.S. government transfers.

Imports of goods and services and income payments

Imports of goods and services and income payments decreased $6.3 billion in the first quarter to $1.08 trillion.

Goods imports decreased $13.4 billion to $635.9 billion, primarily reflecting a decrease in industrial supplies and materials, mainly petroleum and products.
Primary income payments increased $4.3 billion to $220.7 billion, primarily reflecting an increase in direct investment income.

Effects of the 2017 Tax Cuts and Jobs Act on Components of the International Transactions Accounts

In the international transactions accounts, income on equity, or earnings, of foreign affiliates of U.S. multinational enterprises consists of a portion that is repatriated to the parent company in the United States in the form of dividends and a portion that is reinvested in foreign affiliates. In response to the 2017 Tax Cuts and Jobs Act, which generally eliminated taxes on repatriated earnings, some U.S. multinational enterprises repatriated accumulated prior earnings of their foreign affiliates. In the first, second, and fourth quarters of 2018, the repatriation of dividends exceeded current-period earnings, resulting in negative values being recorded for reinvested earnings. In the first quarter of 2019, dividends were $100.2 billion while reinvested earnings were $40.2 billion (see table below). The reinvested earnings are also reflected in the net acquisition of direct investment assets in the financial account (table 6). For more information, see "How does the 2017 Tax Cuts and Jobs Act affect BEA’s business income statistics?" and "How are the international transactions accounts affected by an increase in direct investment dividend receipts?"

Direct Investment Earnings Receipts and Components

	I^r	II^r	III^r	IV^r	I^r	II^r	III^r	IV^r	I^p
Direct Investment Earnings Receipts Billions of dollars, seasonally adjusted
	2017				2018				2019
Direct investment earnings	114.7	115.4	122.2	130.7	134.3	139.4	139.2	134.0	140.5
Dividends	38.2	34.9	55.1	26.9	285.9	223.8	120.2	146.6	100.2
Reinvested earnings	76.5	80.5	67.1	103.8	−151.6	−84.4	18.9	−12.6	40.2
^p Preliminary \| ^r Revised

Capital Account, Fourth Quarter (table 1)

There were no capital-account transactions recorded in the first quarter, following receipts of $2.7 billion in the fourth quarter. The fourth-quarter transactions reflected receipts from foreign insurance companies for losses resulting from the wildfires in California. For information on transactions associated with natural disasters, see "What are the effects of hurricanes and other disasters on the international economic accounts?"

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

Net U.S. borrowing measured by financial-account transactions was $37.8 billion in the first quarter, a decrease from net borrowing of $161.6 billion in the fourth quarter.

Financial assets

Net U.S. acquisition of financial assets excluding financial derivatives increased $4.3 billion in the first quarter to $151.6 billion.

Net U.S. acquisition of direct investment assets increased $33.8 billion to $59.5 billion. For more information on recent transactions in direct investment assets, see "Effects of the 2017 Tax Cuts and Jobs Act on Components of the International Transactions Accounts."
Net U.S. acquisition of other investment assets increased $9.9 billion to $151.6 billion, reflecting an increase in net U.S. provision of loans to foreign residents that was mostly offset by a decrease in net U.S acquisition of currency and deposits.
Net U.S. sales of portfolio investment assets increased $37.5 billion to $59.7 billion, reflecting net U.S. sales of foreign stocks following net U.S. purchases in the fourth quarter.

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives decreased $118.3 billion in the first quarter to $167.9 billion.

Net U.S. incurrence of other investment liabilities decreased $148.5 billion to $70.2 billion, mostly reflecting net foreign withdrawal of deposits in the United States following a net increase in deposits in the fourth quarter.
Net foreign sales of U.S. portfolio investment liabilities were $7.7 billion following net foreign purchases of $14.9 billion in the fourth quarter, reflecting relatively large and nearly offsetting changes in U.S. stock and debt security transactions from the fourth to the first quarter.
Net U.S. incurrence of direct investment liabilities increased $52.7 billion to $105.5 billion, primarily reflecting net U.S. incurrence of debt liabilities following net U.S. repayment in the fourth quarter.

Financial derivatives

Transactions in financial derivatives other than reserves reflected first-quarter net borrowing of $21.4 billion.

Statistical Discrepancy (table 1)

The statistical discrepancy was $92.6 billion in the first quarter following a statistical discrepancy of −$20.4 billion in the fourth quarter.

	Preliminary estimate	Revised estimate
Updates to Fourth Quarter 2018 International Transactions Accounts Aggregatess Billions of dollars, seasonally adjusted
Current-account balance	−134.4	−143.9
Goods balance	−233.1	−232.3
Services balance	66.1	61.2
Primary-income balance	60.4	60.1
Secondary-income balance	−27.8	−32.8
Capital-account balance	8.9	2.7
Net lending (+)/borrowing (–) from financial-account transactions	−168.3	−161.6
Statistical discrepancy	−42.8	−20.4

Annual Update of the International Transactions Accounts (table 9)

The statistics in this release reflect the annual update of the U.S. international transactions accounts. With this update, BEA has incorporated newly available and revised source data for 2016–2018 for most statistical series. The exceptions are direct investment income and financial transactions, for which BEA has incorporated newly available and revised survey data for 2018 only. The incorporation of updated direct investment survey data for 2016 and 2017 was delayed until 2020 because of the impact of the partial government shutdown that started in December 2018. With this annual update, BEA has also incorporated updated seasonal adjustments for 2014–2018.

Newly Available and Revised Source Data: Key Providers and Years Affected

Agency	Data	Years affected
BEA	Quarterly international services surveys	2016–2018
BEA	Quarterly direct investment surveys	2018
U.S. Census Bureau	Revised source data for Census-basis goods	2016–2018
U.S. Department of the Treasury	Annual portfolio investment surveys	2017–2018
U.S. Department of the Treasury	Quarterly and monthly portfolio and other investment surveys	2016–2018

More information, including a discussion of new standard tables that will be introduced with the September 2019 release and changes to existing standard tables that will be introduced with the annual update in 2020, appears in "Preview of the 2019 Annual Update of the International Economic Accounts" in the April 2019 issue of the Survey of Current Business. Additional information on the update to the U.S. international transactions accounts will be provided in the July issue of the Survey of Current Business.

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Next release: September 19, 2019 at 8:30 A.M. EDT
U.S. International Transactions, Second Quarter 2019

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Full Release & Tables (PDF)

Tables Only (Excel)

Release Highlights (PDF)

Technical

Christopher Gohrband

(301) 278-9564

Christopher.Gohrband@bea.gov

Media (BEA)

Connie O'Connell

301-278-9003

Connie.OConnell@bea.gov

Additional Information

Resources

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Historical time series for these estimates can be accessed in BEA's interactive data application.
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For more on BEA's statistics, see our monthly online journal, the Survey of Current Business.
BEA's news release schedule.
More information on these international transactions statistics will be provided next month in the Survey of Current Business.
More information on the international transactions accounts (ITAs) and a description of the estimation methods used to compile them is provided in U.S. International Economic Accounts: Concepts and Methods.

Definitions

The current account consists of transactions between U.S. residents and nonresidents in goods, services, primary income, and secondary income.

Goods are physical items with ownership rights that can be exchanged among institutional units through transactions.

Services transactions consist of transactions arising from productive activities that change the condition of the consumer or that facilitate the exchange of products and financial assets.

Primary income transactions include investment income and compensation of employees. Investment income is the return on holdings of financial assets and includes direct investment income, portfolio investment income, other investment income, and income on reserve assets. Compensation of employees is income for the contribution of labor inputs to the production process.

Secondary income consists of current transfers between residents and nonresidents. Unlike an exchange, a transfer is a transaction in which a good, service, or asset is provided without a corresponding return of economic value. 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.

The capital account consists of capital transfers between residents and nonresidents and the cross-border acquisition and disposal of nonproduced nonfinancial assets. Capital transfers include debt forgiveness and certain disaster-related nonlife insurance claims. Nonproduced nonfinancial assets include natural resources and contracts, leases, and licenses. Capital-account transactions are distinguished from current-account transactions in that capital-account transactions result in a change in the assets of one or both parties to the transaction without affecting the income or savings of either party.

The financial account consists of transactions between U.S. residents and nonresidents for direct investment, portfolio investment, other investment, reserves, and financial derivatives other than reserves.

Direct investment is a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence on the management of an enterprise resident in another economy. Ownership or control of 10 percent or more of the enterprise’s voting securities is the threshold for separating direct investment from other types of investment. Direct-investment transactions in the financial account include transactions in equity (including reinvestment of earnings) and debt instruments.

Portfolio investment transactions consist of cross-border transactions involving equity and investment fund shares and debt securities, excluding those included in direct investment or reserve assets.

Other investment is a residual category that includes cross-border financial instruments other than those included in direct investment, portfolio investment, financial derivatives, and reserve assets. Other-investment transactions consist of transactions in currency and deposits, loans, insurance technical reserves, trade credit and advances, and, for liabilities, special drawing rights allocations.

Reserve assets are those external assets that are readily available to and controlled by monetary authorities for meeting balance of payments financing needs, for intervention in exchange markets to affect the currency exchange rate, and for other related purposes such as maintaining confidence in the currency and the economy and serving as a basis for foreign borrowing. The major published components are monetary gold, International Monetary Fund (IMF) special drawing rights (SDRs), reserve position in the IMF, and other reserve assets.

Financial derivatives other than reserves consist of financial contracts that are linked to underlying financial instruments, commodities, or indicators. Transactions in financial derivatives consist of U.S. cash receipts and payments arising from the sale, purchase, periodic settlement, or final settlement of financial derivatives contracts. 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).

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 can also be calculated as the difference between net lending (borrowing) measured from financial-account transactions and net lending (borrowing) measured from current- and capital-account transactions.

The current-account balance is the difference between credits (exports and income receipts) and debits (imports and income payments) in the current account. The balance is a net measure of current-account transactions between the United States and the rest of the world. A positive balance indicates a current-account surplus. A negative balance indicates a current-account deficit.

Net lending (borrowing) measures the balance of funds supplied to the rest of the world. Net lending means that, in net terms, the U.S. economy supplies funds to the rest of the world. Net borrowing means the opposite. Net lending (borrowing) can be measured by current- and capital-account transactions or by financial-account transactions. Conceptually, the two measures are equal. In practice, the two measures differ by the statistical discrepancy.

Release and update cycle

Preliminary quarterly statistics for the ITAs are released in March, June, September, and December approximately 80 days after the end of the reference quarter. These statistics are updated the following quarter to incorporate new source data. Quarterly statistics are open for revision for at least the prior three years in annual updates released in June. Preliminary annual statistics are released in March along with statistics for the fourth quarter of the previous year. These annual statistics are open for revision for at least the prior three years in subsequent annual updates.

Related statistics

The ITAs constitute one part of a broader set of U.S. international economic accounts that, taken together, provide a comprehensive, integrated, and detailed picture of U.S. international economic activities.

The international investment position (IIP) accounts are released quarterly. Financial transactions that are reported in the ITAs are one type of change in position recorded in the IIP accounts.

Statistics on direct investment and multinational enterprises (MNEs) include annual statistics on the activities of MNEs, detailed annual and quarterly statistics on direct investment, and annual statistics on new investment in the United States.

Statistics on international services, released annually, include detailed annual information on trade in services and on services supplied through the channel of direct investment by affiliates of MNEs.

U.S. international trade in goods and services, released by BEA and the U.S. Census Bureau, provides monthly statistics on trade in goods and services.