FOR WIRE TRANSMISSION: 8:30 A.M. EST, WEDNESDAY, December 17, 2008 Douglas B. Weinberg: (202) 606-9590 BEA 08-56 U.S. International Transactions: Third 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--decreased to $174.1 billion (preliminary) in the third quarter of 2008 from $180.9 billion (revised) in the second quarter. The decrease was accounted for by increases in the surpluses on income and on services and decreases in the deficit on goods and in net unilateral current transfers to foreigners. Goods and services The deficit on goods and services decreased to $176.5 billion in the third quarter from $180.1 billion in the second. Goods The deficit on goods decreased to $214.7 billion in the third quarter from $216.3 billion in the second. Goods exports increased to $346.5 billion from $337.3 billion. More than half of the increase was accounted for by a rise in industrial supplies and materials, largely reflecting increases in energy products and in chemicals. Automotive vehicles and parts, capital goods, and consumer goods also increased. Goods imports increased to $561.2 billion from $553.6 billion. The increase was more than accounted for by an increase in petroleum and products. Nonpetroleum products decreased slightly, as decreases in automotive vehicles and parts and in capital goods were largely offset by increases in nonpetroleum industrial supplies and materials and in consumer goods. Services The surplus on services increased to $38.2 billion in the third quarter from $36.2 billion in the second. Services receipts increased to $142.5 billion from $138.2 billion. The increase was largely accounted for by increases in travel, in “other” private services (which includes items such as business, professional, and technical services, insurance services, and financial services), in passenger fares, and in royalties and license fees. Services payments increased to $104.3 billion from $101.9 billion. The increase was largely accounted for by increases in royalties and license fees and in “other” private services. Income The surplus on income increased to $30.8 billion in the third quarter from $28.2 billion in the second. Investment income Income receipts on U.S.-owned assets abroad decreased to $193.9 billion from $195.7 billion. The decrease was more than accounted for by a decrease in direct investment receipts. In contrast, “other” private receipts (which consists of interest and dividends) and U.S. government receipts increased. Income payments on foreign-owned assets in the United States decreased to $161.3 billion from $165.7 billion. The decrease was more than accounted for by decreases in direct investment payments and in U.S. government payments. In contrast, “other” private payments increased. Compensation of employees Receipts for compensation of U.S. workers abroad were virtually unchanged at $0.7 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 $28.4 billion in the third quarter, down from $29.0 billion in the second. The decrease was largely accounted for by a decrease in private remittances and other transfers. Capital Account Net capital account payments (outflows) were virtually unchanged at $0.6 billion in the third quarter. 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 $135.2 billion in the third quarter, up from $122.9 billion in the second. Net acquisitions by foreign residents of assets in the United States picked up, and transactions by U.S. residents resulted in a smaller decrease in U.S.-owned assets abroad in the third quarter than in the second quarter. U.S.-owned assets abroad U.S.-owned assets abroad decreased $9.5 billion in the third quarter, following a decrease of $102.7 billion in the second. U.S. claims on foreigners reported by U.S. banks decreased $152.0 billion in the third quarter, following a decrease of $213.9 billion in the second. Transactions in foreign securities shifted to net U.S. sales of $86.8 billion in the third quarter from net U.S. purchases of $33.6 billion in the second. Transactions in foreign stocks shifted to net U.S. sales of $14.8 billion from net U.S. purchases of $21.4 billion. Transactions in foreign bonds shifted to net U.S. sales of $72.0 billion from net U.S. purchases of $12.2 billion. U.S. direct investment abroad increased $56.9 billion in the third quarter, following an increase of $84.0 billion in the second. The slowdown resulted from a shift from an increase to a decrease in net intercompany debt investment abroad and a slowdown in reinvested earnings. In contrast, net equity capital investment picked up. U.S. official reserve assets increased $0.2 billion in the third quarter, following an increase of $1.3 billion in the second. U.S. government assets other than official reserve assets increased $226.0 billion in the third quarter, following an increase of $41.6 billion in the second. The exceptionally large third-quarter increase resulted from drawings on temporary reciprocal currency arrangements between the U.S. Federal Reserve System and foreign central banks that do not meet the strict definition of U.S. reserve assets. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $125.7 billion in the third quarter, following an increase of $22.7 billion in the second. U.S. liabilities to foreigners reported by U.S. banks decreased $147.9 billion in the third quarter, following a decrease of $256.6 billion in the second. Net foreign purchases of U.S. Treasury securities were $89.5 billion in the third quarter, up from $65.7 billion in the second. Transactions in U.S. securities other than U.S. Treasury securities shifted to net foreign sales of $89.2 billion in the third quarter from net foreign purchases of $17.1 billion in the second. The shift largely resulted from a shift to net foreign sales of $34.7 billion of U.S. corporate bonds from net foreign purchases of $50.6 billion. In addition, net foreign sales of U.S. federally sponsored agency bonds were $57.0 billion, up from $32.8 billion. In contrast, transactions in U.S. stocks shifted to net foreign purchases of $2.5 billion from net foreign sales of $0.7 billion. Foreign direct investment in the United States increased $66.1 billion in the third quarter, following an increase of $105.3 billion in the second. The slowdown almost entirely resulted from a slowdown in net intercompany debt investment in the United States. In addition, reinvested earnings fell slightly. In contrast, net equity capital investment in the United States picked up. Foreign official assets in the United States increased $117.7 billion in the third quarter, following an increase of $145.4 billion in the second. Net U.S. currency shipments to foreigners were $5.8 billion in the third quarter, up from $0.2 billion in the second. The statistical discrepancy--errors and omissions in recorded transactions--was a positive $39.5 billion in the third quarter, compared with a positive $58.7 billion in the second. In the third quarter, the U.S. dollar appreciated 4 percent on a trade- weighted quarterly average basis against a group of 7 major currencies. Revisions The second-quarter international transactions are revised from previously published estimates. The current-account deficit was revised to $180.9 billion from $183.1 billion. The goods deficit was unrevised at $216.3 billion; the services surplus was revised to $36.2 billion from $35.8 billion; the income surplus was revised to $28.2 billion from $27.3 billion; and unilateral current transfers were revised to net outflows of $29.0 billion from $29.9 billion. Net financial inflows were revised to $122.9 billion from $136.7 billion. * * * Release dates in 2009: Fourth quarter and year 2008...................March 18, 2009 (Wednesday) First quarter 2009..............................June 17, 2009 (Wednesday) Second quarter 2009........................September 16, 2009 (Wednesday) Third quarter 2009..........................December 16, 2009 (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. December 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 II r III p II-III Current account 1 Exports of goods and services and income receipts...................................... 2,463,505 572,182 602,122 638,393 650,808 651,473 671,944 683,708 11,764 2 Exports of goods and services....................................................... 1,645,726 385,436 399,951 424,873 435,465 451,645 475,498 489,053 13,555 3 Goods, balance of payments basis................................................ 1,148,481 270,318 279,488 295,494 303,180 317,813 337,312 346,536 9,224 4 Services........................................................................ 497,245 115,118 120,463 129,378 132,285 133,833 138,186 142,518 4,332 5 Transfers under U.S. military agency sales contracts........................ 16,052 4,629 4,000 3,881 3,542 4,371 3,554 3,570 16 6 Travel...................................................................... 96,712 21,818 23,154 25,241 26,499 27,060 28,053 29,468 1,415 7 Passenger fares............................................................. 25,586 5,800 5,996 6,530 7,259 7,623 7,687 8,462 775 8 Other transportation........................................................ 51,586 12,076 12,639 13,081 13,790 14,632 15,791 15,820 29 9 Royalties and license fees.................................................. 82,614 18,991 19,866 21,940 21,817 21,559 22,577 23,310 733 10 Other private services...................................................... 223,483 51,508 54,521 58,396 59,058 58,289 60,216 61,572 1,356 11 U.S. government miscellaneous services...................................... 1,212 296 288 309 320 299 308 315 7 12 Income receipts..................................................................... 817,779 186,746 202,171 213,520 215,343 199,827 196,446 194,655 -1,791 13 Income receipts on U.S.-owned assets abroad..................................... 814,807 186,013 201,434 212,774 214,587 199,064 195,679 193,910 -1,769 14 Direct investment receipts.................................................. 368,275 83,391 89,673 94,953 100,259 97,262 101,524 98,068 -3,456 15 Other private receipts...................................................... 444,299 102,063 111,187 117,275 113,774 101,088 93,412 94,759 1,347 16 U.S. government receipts.................................................... 2,233 559 574 546 554 714 743 1,083 340 17 Compensation of employees....................................................... 2,972 733 737 746 756 763 767 745 -22 18 Imports of goods and services and income payments...................................... -3,082,014 -738,938 -771,262 -783,548 -788,264 -795,371 -823,859 -829,408 -5,549 19 Imports of goods and services....................................................... -2,345,984 -564,979 -578,770 -592,986 -609,248 -628,756 -655,578 -665,589 -10,011 20 Goods, balance of payments basis................................................ -1,967,853 -473,681 -485,375 -496,698 -512,099 -528,845 -553,641 -561,246 -7,605 21 Services........................................................................ -378,130 -91,298 -93,395 -96,288 -97,149 -99,910 -101,937 -104,343 -2,406 22 Direct defense expenditures................................................. -32,820 -7,915 -8,085 -8,132 -8,688 -8,769 -8,986 -9,150 -164 23 Travel...................................................................... -76,167 -18,538 -18,849 -19,247 -19,533 -20,403 -20,292 -20,168 124 24 Passenger fares............................................................. -28,486 -6,721 -6,979 -7,422 -7,364 -7,928 -8,033 -8,245 -212 25 Other transportation........................................................ -67,050 -16,022 -16,767 -17,119 -17,142 -17,869 -18,563 -18,838 -275 26 Royalties and license fees.................................................. -25,048 -6,643 -6,260 -6,155 -5,991 -6,663 -6,626 -7,727 -1,101 27 Other private services...................................................... -144,375 -34,444 -35,437 -37,145 -37,350 -37,196 -38,349 -39,108 -759 28 U.S. government miscellaneous services...................................... -4,184 -1,016 -1,018 -1,069 -1,081 -1,083 -1,088 -1,107 -19 29 Income payments..................................................................... -736,030 -173,959 -192,492 -190,562 -179,016 -166,615 -168,282 -163,819 4,463 30 Income payments on foreign-owned assets in the United States.................... -726,031 -171,560 -189,991 -188,045 -176,436 -164,055 -165,734 -161,274 4,460 31 Direct investment payments.................................................. -134,414 -33,128 -40,620 -35,243 -25,424 -27,001 -36,656 -32,769 3,887 32 Other private payments...................................................... -426,515 -99,373 -107,963 -110,898 -108,281 -94,302 -86,115 -86,987 -872 33 U.S. government payments.................................................... -165,102 -39,059 -41,408 -41,904 -42,731 -42,752 -42,963 -41,518 1,445 34 Compensation of employees....................................................... -9,999 -2,399 -2,501 -2,517 -2,580 -2,560 -2,547 -2,545 2 35 Unilateral current transfers, net...................................................... -112,705 -30,174 -24,953 -27,796 -29,784 -31,742 -29,028 -28,390 638 36 U.S. government grants.............................................................. -33,237 -10,567 -5,611 -7,109 -9,950 -9,990 -7,305 -7,117 188 37 U.S. government pensions and other transfers........................................ -7,323 -1,805 -1,834 -1,837 -1,849 -1,951 -1,966 -1,970 -4 38 Private remittances and other transfers............................................. -72,145 -17,802 -17,508 -18,850 -17,985 -19,801 -19,757 -19,303 454 December 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 II r III p II-III Capital account 39 Capital account transactions, net...................................................... -1,843 -543 -112 -617 -571 -600 -631 -593 38 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 -260,644 102,698 9,505 -93,193 41 U.S. official reserve assets........................................................ -122 -72 26 -54 -22 -276 -1,267 -179 1,088 42 Gold............................................................................ 0 0 0 0 0 0 0 0 0 43 Special drawing rights.......................................................... -154 -43 -39 -37 -35 -29 -22 -30 -8 44 Reserve position in the International Monetary Fund............................. 1,021 212 294 230 285 112 -955 256 1,211 45 Foreign currencies.............................................................. -989 -241 -229 -247 -272 -359 -290 -405 -115 46 U.S. government assets, other than official reserve assets.......................... -22,273 445 -596 623 -22,744 3,265 -41,592 -225,994 -184,402 47 U.S. credits and other long-term assets......................................... -2,475 -608 -1,405 -182 -279 -179 -1,106 -338 768 48 Repayments on U.S. credits and other long-term assets........................... 4,104 1,091 687 780 1,546 487 497 597 100 49 U.S. foreign currency holdings and U.S. short-term assets....................... -23,902 -38 122 25 -24,011 2,957 -40,983 -226,253 -185,270 50 U.S. private assets................................................................. -1,267,459 -442,438 -522,985 -171,045 -130,990 -263,634 145,558 235,678 90,120 51 Direct investment............................................................... -333,271 -66,706 -93,616 -62,043 -110,905 -89,100 -84,049 -56,871 27,178 52 Foreign securities.............................................................. -288,731 -99,541 -84,671 -100,317 -4,202 -35,066 -33,576 86,768 120,344 53 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns..... -706 -46,048 -134,713 80,012 100,043 81,848 49,324 53,787 4,463 54 U.S. claims reported by U.S. banks, not included elsewhere...................... -644,751 -230,143 -209,985 -88,697 -115,926 -221,316 213,859 151,994 -61,865 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 22,719 125,692 102,973 56 Foreign official assets in the United States........................................ 411,058 163,270 88,822 13,469 145,497 173,533 145,391 117,663 -27,728 57 U.S. government securities...................................................... 230,330 121,640 61,641 -7,788 54,837 167,883 151,288 108,118 -43,170 58 U.S. Treasury securities.................................................... 58,865 40,337 1,610 -25,810 42,728 88,649 58,143 116,479 58,336 59 Other....................................................................... 171,465 81,303 60,031 18,022 12,109 79,234 93,145 -8,361 -101,506 60 Other U.S. government liabilities............................................... 5,342 366 -69 913 4,132 1,645 2,439 1,714 -725 61 U.S. liabilities reported by U.S. banks, not included elsewhere................. 108,695 30,329 15,956 9,873 52,537 -26,930 -30,055 9,617 39,672 62 Other foreign official assets................................................... 66,691 10,935 11,294 10,471 33,991 30,935 21,719 -1,786 -23,505 63 Other foreign assets in the United States........................................... 1,646,645 529,443 629,290 253,007 234,905 285,484 -122,672 8,029 130,701 64 Direct investment............................................................... 237,542 14,026 61,862 105,908 55,746 80,437 105,304 66,117 -39,187 65 U.S. Treasury securities........................................................ 156,825 42,882 -13,522 67,406 60,059 63,263 65,692 89,506 23,814 66 U.S. securities other than U.S. Treasury securities............................. 573,850 183,507 310,340 -30,486 110,489 -20,475 17,068 -89,163 -106,231 67 U.S. currency................................................................... -10,675 -6,165 -1,635 655 -3,530 -914 230 5,845 5,615 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 -54,350 83,598 137,948 69 U.S. liabilities reported by U.S. banks, not included elsewhere................. 532,813 205,132 149,769 53,925 123,987 79,088 -256,616 -147,874 108,742 70 Financial derivatives, net............................................................. 6,496 14,795 -1,007 5,942 -13,234 -8,001 -2,519 n.a. 2,519 71 Statistical discrepancy (sum of above items with sign reversed)........................ -41,287 -67,970 656 71,627 -45,600 -14,131 58,677 39,487 -19,190 Memoranda: 72 Balance on goods (lines 3 and 20)...................................................... -819,373 -203,363 -205,887 -201,204 -208,919 -211,032 -216,328 -214,710 1,618 73 Balance on services (lines 4 and 21)................................................... 119,115 23,820 27,068 33,090 35,136 33,922 36,249 38,175 1,926 74 Balance on goods and services (lines 2 and 19)......................................... -700,258 -179,543 -178,819 -168,114 -173,783 -177,110 -180,079 -176,536 3,543 75 Balance on income (lines 12 and 29).................................................... 81,749 12,787 9,679 22,958 36,327 33,212 28,164 30,835 2,671 76 Unilateral current transfers, net (line 35)............................................ -112,705 -30,174 -24,953 -27,796 -29,784 -31,742 -29,028 -28,390 638 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 -180,944 -174,091 6,853 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