FOR WIRE TRANSMISSION: 8:30 A.M. EDT, WEDNESDAY, September 17, 2008 Douglas B. Weinberg: (202) 606-9590 BEA 08-41 U.S. International Transactions: Second Quarter 2008 Current Account The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--increased to $183.1 billion (preliminary) in the second quarter of 2008 from $175.6 billion (revised) in the first quarter. The increase was more than accounted for by a decrease in the surplus on income and an increase in the deficit on goods. In contrast, the surplus on services increased, and net unilateral current transfers to foreigners decreased. Goods and services The deficit on goods and services increased to $180.6 billion in the second quarter from $177.1 billion in the first. Goods The deficit on goods increased to $216.3 billion in the second quarter from $211.0 billion in the first. Goods exports increased to $337.3 billion from $317.8 billion. More than half of the increase resulted from an increase in industrial supplies and materials, including energy products. The next largest increases were in capital goods, in agricultural products, and in consumer goods. Goods imports increased to $553.6 billion from $528.8 billion. Nearly half of the increase resulted from an increase in petroleum and products. The next largest increases were in nonpetroleum industrial supplies and materials, in capital goods, and in consumer goods. Services The surplus on services increased to $35.8 billion in the second quarter from $33.9 billion in the first. Services receipts increased to $137.5 billion from $133.8 billion. The increase was largely accounted for by increases in “other” private services (which includes items such as business, professional, and technical services, insurance services, and financial services), in travel, in “other” transportation (which includes freight and port services), and in royalties and license fees. Services payments increased to $101.7 billion from $99.9 billion. The increase was largely accounted for by increases in “other” transportation and in “other” private services. Income The surplus on income decreased to $27.3 billion in the second quarter from $33.2 billion in the first. Investment income Income receipts on U.S.-owned assets abroad decreased to $194.1 billion from $199.1 billion. The decrease was more than accounted for by a decrease in “other” private receipts (which consists of interest and dividends). In contrast, direct investment receipts increased. Income payments on foreign-owned assets in the United States increased to $165.0 billion from $164.1 billion. The increase was more than accounted for by an increase in direct investment payments. In contrast, “other” private payments decreased. Compensation of employees Receipts for compensation of U.S. workers abroad were virtually unchanged at $0.8 billion, and payments for compensation of foreign workers in the United States were also virtually unchanged, at $2.5 billion. Unilateral current transfers Net unilateral current transfers to foreigners were $29.9 billion in the second quarter, down from $31.7 billion in the first. The decrease was more than accounted for by a decrease in U.S. government grants. In contrast, private remittances and other transfers increased. Capital Account Net capital account payments (outflows) were $0.7 billion in the second quarter, up slightly from $0.6 billion in the first. Financial Account Net financial inflows--net acquisitions by foreign residents of assets in the United States less net acquisitions by U.S. residents of assets abroad-- were $136.7 billion in the second quarter, down from $190.4 billion in the first. Net acquisitions by foreign residents slowed sharply, and transactions by U.S. residents resulted in a decrease in U.S.-owned assets abroad in the second quarter, following an increase in the first quarter. U.S.-owned assets abroad U.S.-owned assets abroad decreased $110.4 billion in the second quarter, following an increase of $260.6 billion in the first. U.S. claims on foreigners reported by U.S. banks decreased $225.7 billion in the second quarter, following an increase of $221.3 billion in the first. Net U.S. purchases of foreign securities were $32.5 billion in the second quarter, down from $35.1 billion in the first. Net U.S. purchases of foreign stocks were $21.3 billion, down from $26.9 billion. Net U.S. purchases of foreign bonds were $11.1 billion, up from $8.2 billion. U.S. direct investment abroad increased $65.5 billion in the second quarter, following an increase of $89.1 billion in the first. The slowdown resulted from a shift from an increase to a decrease in net intercompany debt investment abroad and a slowdown in net equity capital investment. In contrast, reinvested earnings picked up. U.S. official reserve assets increased $1.3 billion in the second quarter, following an increase of $0.3 billion in the first. U.S. government assets other than official reserve assets increased $41.3 billion in the second quarter, following a decrease of $3.3 billion in the first. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $26.3 billion in the second quarter, following an increase of $459.0 billion in the first. U.S. liabilities to foreigners reported by U.S. banks decreased $233.6 billion in the second quarter, following an increase of $79.1 billion in the first. Net foreign purchases of U.S. Treasury securities were $67.0 billion in the second quarter, up from $63.3 billion in the first. Transactions in U.S. securities other than U.S. Treasury securities shifted to net foreign purchases of $16.5 billion in the second quarter from net foreign sales of $20.5 billion in the first. The shift was more than accounted for by a shift to net foreign purchases of $50.5 billion of U.S. corporate bonds from net foreign sales of $10.7 billion. In contrast, transactions in U.S. stocks shifted to net foreign sales of $1.1 billion from net foreign purchases of $8.3 billion, and net foreign sales of U.S. federally sponsored agency bonds were $32.8 billion, up from $18.0 billion. Foreign direct investment in the United States increased $93.8 billion in the second quarter, following an increase of $80.4 billion in the first. The pickup was largely accounted for by a pickup in reinvested earnings. In addition, net equity capital investment in the United States and net intercompany debt investment both increased. Foreign official assets in the United States increased $144.4 billion in the second quarter, following an increase of $173.5 billion in the first. Transactions in U.S. currency shifted to net shipments to foreign countries of $0.2 billion in the second quarter from net shipments to the United States of $0.9 billion in the first. The statistical discrepancy--errors and omissions in recorded transactions--was a positive $47.1 billion in the second quarter, compared with a negative $14.1 billion in the first. In the second quarter, the U.S. dollar depreciated 2 percent on a trade-weighted quarterly average basis against a group of 7 major currencies. Revisions The first-quarter international transactions are revised from previously published estimates. The current-account deficit was revised to $175.6 billion from $176.4 billion. The goods deficit was unrevised at $211.0 billion; the services surplus was revised to $33.9 billion from $36.1 billion; the income surplus was revised to $33.2 billion from $29.8 billion; and unilateral current transfers were revised to net outflows of $31.7 billion from $31.2 billion. Net financial inflows were revised to $190.4 billion from $124.3 billion. * * * Release dates in 2008: Fourth quarter and year 2007....................March 17, 2008 (Monday) First quarter 2008.................……...........June 17, 2008 (Tuesday) Second quarter 2008......................September 17, 2008 (Wednesday) Third quarter 2008........................December 17, 2008 (Wednesday) * * * Summary BEA estimates are available on recorded messages at the time of public release at the following telephone numbers: (202) 606-5306 Gross domestic product -5303 Personal income and outlays 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. September 17, 2008 Table 1. U.S. International Transactions [Millions of dollars, quarters seasonally adjusted] 2007 2008 Change: (Credits +, debits -) 2007 2008 I II III IV I r II p I-II Current account 1 Exports of goods and services and income receipts............................................. 2,463,505 572,182 602,122 638,393 650,808 651,473 669,691 18,218 2 Exports of goods and services.............................................................. 1,645,726 385,436 399,951 424,873 435,465 451,645 474,819 23,174 3 Goods, balance of payments basis....................................................... 1,148,481 270,318 279,488 295,494 303,180 317,813 337,312 19,499 4 Services............................................................................... 497,245 115,118 120,463 129,378 132,285 133,833 137,506 3,673 5 Transfers under U.S. military agency sales contracts............................... 16,052 4,629 4,000 3,881 3,542 4,371 3,516 -855 6 Travel............................................................................. 96,712 21,818 23,154 25,241 26,499 27,060 28,243 1,183 7 Passenger fares.................................................................... 25,586 5,800 5,996 6,530 7,259 7,623 7,904 281 8 Other transportation............................................................... 51,586 12,076 12,639 13,081 13,790 14,632 15,577 945 9 Royalties and license fees......................................................... 82,614 18,991 19,866 21,940 21,817 21,559 22,264 705 10 Other private services............................................................. 223,483 51,508 54,521 58,396 59,058 58,289 59,677 1,388 11 U.S. Government miscellaneous services............................................. 1,212 296 288 309 320 299 325 26 12 Income receipts............................................................................ 817,779 186,746 202,171 213,520 215,343 199,827 194,873 -4,954 13 Income receipts on U.S.-owned assets abroad............................................ 814,807 186,013 201,434 212,774 214,587 199,064 194,106 -4,958 14 Direct investment receipts......................................................... 368,275 83,391 89,673 94,953 100,259 97,262 99,612 2,350 15 Other private receipts............................................................. 444,299 102,063 111,187 117,275 113,774 101,088 93,728 -7,360 16 U.S. Government receipts........................................................... 2,233 559 574 546 554 714 766 52 17 Compensation of employees.............................................................. 2,972 733 737 746 756 763 767 4 18 Imports of goods and services and income payments............................................. -3,082,014 -738,938 -771,262 -783,548 -788,264 -795,371 -822,898 -27,527 19 Imports of goods and services.............................................................. -2,345,984 -564,979 -578,770 -592,986 -609,248 -628,756 -655,369 -26,613 20 Goods, balance of payments basis....................................................... -1,967,853 -473,681 -485,375 -496,698 -512,099 -528,845 -553,641 -24,796 21 Services............................................................................... -378,130 -91,298 -93,395 -96,288 -97,149 -99,910 -101,729 -1,819 22 Direct defense expenditures........................................................ -32,820 -7,915 -8,085 -8,132 -8,688 -8,769 -8,856 -87 23 Travel............................................................................. -76,167 -18,538 -18,849 -19,247 -19,533 -20,403 -20,560 -157 24 Passenger fares.................................................................... -28,486 -6,721 -6,979 -7,422 -7,364 -7,928 -8,133 -205 25 Other transportation............................................................... -67,050 -16,022 -16,767 -17,119 -17,142 -17,869 -18,560 -691 26 Royalties and license fees......................................................... -25,048 -6,643 -6,260 -6,155 -5,991 -6,663 -6,809 -146 27 Other private services............................................................. -144,375 -34,444 -35,437 -37,145 -37,350 -37,196 -37,732 -536 28 U.S. Government miscellaneous services............................................. -4,184 -1,016 -1,018 -1,069 -1,081 -1,083 -1,079 4 29 Income payments............................................................................ -736,030 -173,959 -192,492 -190,562 -179,016 -166,615 -167,529 -914 30 Income payments on foreign-owned assets in the United States........................... -726,031 -171,560 -189,991 -188,045 -176,436 -164,055 -164,979 -924 31 Direct investment payments......................................................... -134,414 -33,128 -40,620 -35,243 -25,424 -27,001 -35,750 -8,749 32 Other private payments............................................................. -426,515 -99,373 -107,963 -110,898 -108,281 -94,302 -86,265 8,037 33 U.S. Government payments........................................................... -165,102 -39,059 -41,408 -41,904 -42,731 -42,752 -42,964 -212 34 Compensation of employees.............................................................. -9,999 -2,399 -2,501 -2,517 -2,580 -2,560 -2,549 11 35 Unilateral current transfers, net............................................................. -112,705 -30,174 -24,953 -27,796 -29,784 -31,742 -29,941 1,801 36 U.S. Government grants..................................................................... -33,237 -10,567 -5,611 -7,109 -9,950 -9,990 -7,138 2,852 37 U.S. Government pensions and other transfers............................................... -7,323 -1,805 -1,834 -1,837 -1,849 -1,951 -1,976 -25 38 Private remittances and other transfers.................................................... -72,145 -17,802 -17,508 -18,850 -17,985 -19,801 -20,827 -1,026 September 17, 2008 Table 1. U.S. International Transactions (Continued) [Millions of dollars, quarters seasonally adjusted] 2007 2008 Change: (Credits +, debits -) 2007 2008 I II III IV I r II p I-II Capital account 39 Capital account transactions, net............................................................. -1,843 -543 -112 -617 -571 -600 -652 -52 Financial account 40 U.S.-owned assets abroad, excluding financial derivatives (increase/financial outflow (-)).......................................................... -1,289,854 -442,065 -523,556 -170,476 -153,757 -260,644 110,431 371,075 41 U.S. official reserve assets............................................................... -122 -72 26 -54 -22 -276 -1,267 -991 42 Gold................................................................................... 0 0 0 0 0 0 0 0 43 Special drawing rights................................................................. -154 -43 -39 -37 -35 -29 -22 7 44 Reserve position in the International Monetary Fund.................................... 1,021 212 294 230 285 112 -955 -1,067 45 Foreign currencies..................................................................... -989 -241 -229 -247 -272 -359 -290 69 46 U.S. Government assets, other than official reserve assets................................. -22,273 445 -596 623 -22,744 3,265 -41,265 -44,530 47 U.S. credits and other long-term assets................................................ -2,475 -608 -1,405 -182 -279 -179 -1,173 -994 48 Repayments on U.S. credits and other long-term assets.................................. 4,104 1,091 687 780 1,546 487 860 373 49 U.S. foreign currency holdings and U.S. short-term assets.............................. -23,902 -38 122 25 -24,011 2,957 -40,952 -43,909 50 U.S. private assets........................................................................ -1,267,459 -442,438 -522,985 -171,045 -130,990 -263,634 152,963 416,597 51 Direct investment...................................................................... -333,271 -66,706 -93,616 -62,043 -110,905 -89,100 -65,549 23,551 52 Foreign securities..................................................................... -288,731 -99,541 -84,671 -100,317 -4,202 -35,066 -32,457 2,609 53 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns............ -706 -46,048 -134,713 80,012 100,043 81,848 25,224 -56,624 54 U.S. claims reported by U.S. banks, not included elsewhere............................. -644,751 -230,143 -209,985 -88,697 -115,926 -221,316 225,745 447,061 55 Foreign-owned assets in the United States, excluding financial derivatives (increase/financial inflow (+))............................................................ 2,057,703 692,713 718,112 266,476 380,402 459,017 26,301 -432,716 56 Foreign official assets in the United States............................................... 411,058 163,270 88,822 13,469 145,497 173,533 144,417 -29,116 57 U.S. Government securities............................................................. 230,330 121,640 61,641 -7,788 54,837 167,883 150,390 -17,493 58 U.S. Treasury securities........................................................... 58,865 40,337 1,610 -25,810 42,728 88,649 57,245 -31,404 59 Other.............................................................................. 171,465 81,303 60,031 18,022 12,109 79,234 93,145 13,911 60 Other U.S. Government liabilities...................................................... 5,342 366 -69 913 4,132 1,645 2,439 794 61 U.S. liabilities reported by U.S. banks, not included elsewhere........................ 108,695 30,329 15,956 9,873 52,537 -26,930 -30,131 -3,201 62 Other foreign official assets.......................................................... 66,691 10,935 11,294 10,471 33,991 30,935 21,719 -9,216 63 Other foreign assets in the United States.................................................. 1,646,645 529,443 629,290 253,007 234,905 285,484 -118,116 -403,600 64 Direct investment...................................................................... 237,542 14,026 61,862 105,908 55,746 80,437 93,767 13,330 65 U.S. Treasury securities............................................................... 156,825 42,882 -13,522 67,406 60,059 63,263 66,950 3,687 66 U.S. securities other than U.S. Treasury securities.................................... 573,850 183,507 310,340 -30,486 110,489 -20,475 16,532 37,007 67 U.S. currency.......................................................................... -10,675 -6,165 -1,635 655 -3,530 -914 230 1,144 68 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns....... 156,290 90,061 122,476 55,599 -111,846 84,085 -61,972 -146,057 69 U.S. liabilities reported by U.S. banks, not included elsewhere........................ 532,813 205,132 149,769 53,925 123,987 79,088 -233,623 -312,711 70 Financial derivatives, net.................................................................... 6,496 14,795 -1,007 5,942 -13,234 -8,001 n.a. 8,001 71 Statistical discrepancy (sum of above items with sign reversed)............................... -41,287 -67,970 656 71,627 -45,600 -14,131 47,067 61,198 Memoranda: 72 Balance on goods (lines 3 and 20)............................................................. -819,373 -203,363 -205,887 -201,204 -208,919 -211,032 -216,328 -5,296 73 Balance on services (lines 4 and 21).......................................................... 119,115 23,820 27,068 33,090 35,136 33,922 35,777 1,855 74 Balance on goods and services (lines 2 and 19)................................................ -700,258 -179,543 -178,819 -168,114 -173,783 -177,110 -180,551 -3,441 75 Balance on income (lines 12 and 29)........................................................... 81,749 12,787 9,679 22,958 36,327 33,212 27,344 -5,868 76 Unilateral current transfers, net (line 35)................................................... -112,705 -30,174 -24,953 -27,796 -29,784 -31,742 -29,941 1,801 77 Balance on current account (lines 1, 18, and 35 or lines 74, 75, and 76)...................... -731,214 -196,930 -194,093 -172,952 -167,241 -175,640 -183,147 -7,507 p Preliminary r Revised n.a. Not available NOTE: Details may not add to totals because of rounding. Source: U. S. Bureau of Economic Analysis