FOR WIRE TRANSMISSION: 10:00 A.M. EDT, THURSDAY, MARCH 13, 1997 Christopher L. Bach (202) 606-9545 BEA 97-06 Recorded Message 606-5362 U.S. International Transactions: Fourth Quarter and Year 1996 Current account The U.S. current-account deficit decreased to $41.4 billion in the fourth quarter from $47.9 billion (revised) in the third, according to the Commerce Department's Bureau of Economic Analysis. The deficits on goods and services and on investment income decreased, while net unilateral transfers increased. Goods and services The deficit on goods and services decreased to $26.3 billion in the fourth quarter from $34.3 billion in the third. Goods The goods deficit decreased to $45.3 billion in the fourth quarter from $51.9 billion in the third. Goods exports increased to $158.4 billion from $150.1 billion; both nonagricultural and agricultural exports increased. Good imports increased to $203.7 billion from $202.0 billion; both nonpetroleum and petroleum imports increased. Services The surplus on services increased to $19.0 billion in the fourth quarter from $17.6 billion in the third. Services receipts increased to $57.4 billion from $55.6 billion. Most major categories increased. Services payments increased to $38.5 billion from $38.0 billion. Travel, passenger fares, and "other" private services increased, while royalties and license fees -- which had been boosted in the third quarter by one-time payments for broadcast rights to the Summer Olympic Games -- decreased. Investment income The deficit on investment income decreased to $2.4 billion in the fourth quarter from $4.1 billion in the third. Income receipts increased to $52.6 billion from $48.7 billion, as a result of increases in both direct investment and "other" private income receipts. Income payments increased to $55.0 billion from $52.8 billion as a result of increases in "other" private and U.S. Government income payments. Unilateral transfers Net unilateral transfers increased to $12.6 billion in the fourth quarter from $9.5 billion in the third as a result of U.S. Government grants to Israel. Capital transactions Net recorded capital inflows were $68.0 billion in the fourth quarter, compared with net inflows of $69.7 billion in the third, as both U.S. assets abroad and foreign assets in the United States accelerated by about the same amount. U.S. assets abroad U.S. assets abroad increased $114.1 billion in the fourth quarter, compared with an increase of $73.3 billion in the third. Direct investment outflows and the increase in U.S. claims on foreigners reported by U.S. banks were sharply higher in the fourth quarter than in the third. Among U.S. private assets, U.S. claims on foreigners reported by U.S. banks increased $56.7 billion in the fourth quarter, compared with an increase of $33.2 billion in the third. The increase in the fourth quarter was to meet the demand for dollar credits at banks' offices abroad for merger and acquisition financing and for yearend credit needs, and to finance the surge in net foreign purchases of U.S. Treasury securities. Net U.S. purchases of foreign securities were $27.0 billion in the fourth quarter, compared with $22.9 billion in the third. Net U.S. purchases of foreign bonds accounted for most of the step-up, although net U.S. purchases of foreign stocks also increased. Net capital outflows for U.S. direct investment abroad were $29.8 billion in the fourth quarter, compared with $9.1 billion in the third. A large shift to intercompany debt outflows and strong increase in reinvested earnings contributed to the large increase in net capital outflows. U.S. official reserve assets increased $0.3 billion in the fourth quarter, compared with a $7.5 billion decrease in the third. The third quarter had included repayments by Mexico of $7.0 billion under medium-term swap arrangements. Foreign assets in the United States Foreign assets in the United States increased $182.0 billion in the fourth quarter, compared with an increase of $143.0 billion in the third. Net foreign purchases of U.S. Treasury securities were substantially higher in the fourth quarter than in the third, and U.S. liabilities reported by U.S. banks shifted to a sizable increase. Among assets other than foreign official assets, U.S. liabilities reported by U.S. banks increased $33.2 billion in the fourth quarter, in contrast to a decrease of $1.2 billion in the third. U.S. banks borrowed heavily to finance the simultaneous increase in domestic and foreign credit demand, and to finance the surge in net foreign purchases of U.S. Treasury securities by private foreigners. Net foreign purchases of U.S. Treasury securities by private foreigners were a record $67.3 billion in the fourth quarter, up from the previous record of $43.4 billion in the third. Sharply rising bond prices, a large interest differential in favor of U.S. over foreign assets, and dollar appreciation were major factors contributing to the surge. Net foreign purchases of U.S. securities other than U.S. Treasury securities were $31.7 billion in the fourth quarter, down from $34.8 billion in the third. Net foreign purchases of both U.S. stocks and bonds were lower. Net capital inflows for foreign direct investment in the United States were $16.8 billion in the fourth quarter, compared with $21.1 billion in the third. A large shift to intercompany debt outflows more than offset a large step-up in equity capital inflows. Foreign official assets in the United States increased $33.0 billion in the fourth quarter, compared with an increase of $24.2 billion in the third. Dollar assets of developing countries accounted for most of the fourth-quarter increase. The statistical discrepancy -- errors and omissions in recorded transactions -- was an outflow of $26.6 billion in the fourth quarter, compared with an outflow of $21.8 billion in the third. The dollar appreciated 1 percent in the fourth quarter on a trade-weighted quarterly average basis against the currencies of 10 industrial countries. Year 1996 Current account The U.S. current-account deficit increased to $165.1 billion in 1996 from $148.2 billion in 1995. The deficits on goods and services and on investment income increased, as did net unilateral transfers. Goods and services The deficit on goods and services increased to $114.2 billion in 1996 from $105.1 billion in 1995. The larger goods deficit more than accounted for the increase; the surplus on services increased. Goods The goods deficit increased to $187.7 billion in 1996 from $173.4 billion in 1995. Goods exports increased to $611.7 billion in 1996 from $575.9 billion; both nonagricultural and agricultural exports increased. Goods imports increased to $799.3 billion in 1996 from $749.4 billion; both nonpetroleum and petroleum imports increased. Services The surplus on services increased to $73.5 billion in 1996 from $68.4 billion in 1995. Service receipts increased to $223.9 billion from $210.6 billion. "Other" private services, travel, and royalties and license fees increased the most. Service payments increased to $150.4 billion from $142.2 billion. "Other" private services and travel increased the most. Investment income The deficit on investment income increased to $8.4 billion in 1996 from $8.0 billion in 1995. Income receipts increased to $196.9 billion from $182.7 billion as both direct investment income and "other" private income increased. Income payments increased to $205.3 billion from $190.7 billion, mostly as a result of an increase in U.S. Government payments. Unilateral transfers Net unilateral transfers increased to $42.5 billion from $35.1 billion. Estimates for 1996 include some transfers that were delayed as a result of the U.S. Government shutdown and budget impasse at the end of 1995. Capital transactions Net recorded capital inflows were $218.2 billion in 1996, compared with $116.6 billion in 1995. An acceleration in foreign assets in the United States accounted for the larger net capital inflows. U.S. assets abroad U.S. assets abroad increased $306.8 billion in 1996, compared with an increase of $307.9 billion in 1995. Net U.S. purchases of foreign securities and the increase in U.S. claims on foreigners reported by U.S. banks were higher in 1996 than in 1995; U.S. direct investment outflows were lower. Among U.S. private assets, U.S. claims on foreigners reported by U.S. banks increased $88.2 billion in 1996, compared with an increase of $69.1 billion in 1995. The step-up in credit extended by U.S. banks to their offices abroad was in response to the heightened level of financial activity abroad, to the strong pace of merger and acquisition activity abroad, and to the demand for funds to purchase large amounts of U.S. securities, particularly U.S. Treasury securities. Net U.S. purchases of foreign securities were $104.5 billion in 1996, up from $99.0 billion in 1995, but well below the previous record of $146.3 billion in 1993. Net U.S. purchases of foreign stocks increased, more than offsetting a small decrease in net U.S. purchases of foreign bonds. Net capital outflows for U.S. direct investment abroad were $88.3 billion in 1996, down from $95.5 billion in 1995. A decrease in equity capital outflows more than accounted for the slowdown. U.S. official reserve assets decreased $6.7 billion in 1996, in contrast to an increase of $9.7 billion in 1995. In 1996, the decrease reflected the repayment by Mexico of $8.3 billion under short- and medium-term swap arrangements. Foreign assets in the United States Foreign assets in the United States increased $525.0 billion in 1996, compared with an increase of $424.5 billion in 1995. Net foreign purchases of U.S. Treasury securities, net foreign purchases of securities other than U.S. Treasury securities, and foreign direct investment inflows to the United States were sharply higher in 1996 than in 1995. Among assets other than foreign official assets, U.S. liabilities reported by U.S. banks decreased $1.6 billion in 1996, following an increase of $25.3 billion in 1995. U.S. banks repaid large amounts of foreign borrowing throughout much of the year, but borrowed heavily from abroad in the fourth quarter to finance the simultaneous surge in domestic and international credit demand and to finance the surge in net foreign purchases of U.S. Treasury securities by private foreigners. Net foreign purchases of U.S. Treasury securities by private foreigners were a record $153.8 billion in 1996, up from the previous record of $99.3 billion in 1995. The surge was attributable to rising bond prices, particularly in the last half of the year, large interest-rate differentials in favor of U.S. Treasury bonds, and dollar appreciation. Net foreign purchases of U.S. securities other than U.S. Treasury securities were $131.7 billion in 1996, compared with the previous record of $95.3 billion in 1995. The step-up was more than accounted for by net foreign purchases of bonds; net foreign purchases of stocks were slightly lower. Net capital inflows for foreign direct investment in the United States were a record $84.0 billion in 1996, compared with $60.2 billion in 1995 and the previous record of $67.7 billion in 1989. Both equity and intercompany debt inflows increased strongly. Foreign official assets in the United States increased $122.8 billion in 1996, compared with an increase of $109.8 billion in 1995. Dollar assets of industrial and developing countries each accounted for about half of the increase in 1996. The statistical discrepancy -- errors and omissions in recorded transactions -- was an outflow of $53.1 billion in 1996, in contrast to an inflow of $31.5 billion in 1995. The dollar appreciated 4 percent in 1996 on a trade-weighted average basis against the currencies of 10 industrial countries. * * * Release dates in 1997: First quarter 1997.........................June 19 (Thu) Second quarter 1997...................September 11 (Thu) Third quarter 1997.....................December 10 (Wed) * * * BEA estimates are available in several forms besides the printed news releases. News releases are available at the time of public release through three subscription services offered by the Commerce Department's STAT-USA. Information on how to receive releases by FAX may be obtained by calling (202) 482-1986 (voice). Information about the Economic Bulletin Board (EBB) and about Internet services may be obtained at the same voice number and on-line, as follows: EBB (202) 482-3870 Internet http://www.stat-usa.gov In addition, BEA's most frequently requested statistical series are available on the Internet, as follows: * The Federal Statistics Briefing Room (FSBR) on the White House web site provides summary statistics for GDP and other major aggregates on its output, income, and international statistics pages. http://www.whitehouse.gov/fsbr * The FSBR provides links to BEA's web site, which provides summary tables and charts on BEA's national, international, and regional data. http://www.bea.gov * BEA's web site provides links to detailed BEA databases on STAT-USA's Internet subscription service. http://www.stat-usa.gov * * * Summary 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 5362 U.S. international transactions * * * Additional data and analysis on U.S. international transactions for the fourth quarter and year 1996 will be published in the April 1997 issue of the Survey of Current Business, the monthly journal of the Bureau of Economic Analysis. The Survey is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. First class mail (domestic only): annual subscription $90.00. Foreign airmail delivery rates are available upon request. Second class mail: annual subscription $49.00 domestic, $61.25 foreign; single issue $11.00 domestic, $13.75 foreign. In addition, the Survey of Current Business is now available on Internet in a searchable, retrievable electronic format at least a week before the printed version. To subscribe to STAT-USA's World Wide Web system, go to http://www.stat-usa.gov. Subscriptions for single-user unlimited access to STAT-USA's Internet information are $50.00 for 3 months or $150.00 for 1 year. For further information, call (202) 482-1986. U.S. International Transactions March 13, 1997 [Millions of dollars, seasonally adjusted] 1995 1996 Change: (Credits +, debits -) Change: 1996 1995 1996p 1995-96 IV Ir IIr IIIr IVp III-IV 1 Exports of goods, services, and income .......................... 969,189 1,032,478 63,289 250,128 252,656 257,035 254,405 268,380 13,975 2 Goods, adjusted, excluding military 1/......................... 575,940 611,669 35,729 149,422 150,032 153,120 150,144 158,373 8,229 3 Services 2/.................................................... 210,590 223,907 13,317 54,193 55,075 55,853 55,565 57,413 1,848 4 Transfers under U.S. military agency sales contracts ........ 13,405 13,802 397 3,334 3,092 3,500 3,330 3,880 550 5 Travel....................................................... 61,137 64,499 3,362 15,867 16,205 16,103 15,653 16,538 885 6 Passenger fares.............................................. 18,534 19,579 1,045 4,836 4,854 4,896 4,799 5,030 231 7 Other transportation......................................... 28,063 29,115 1,052 7,211 6,966 7,289 7,343 7,516 173 8 Royalties and license fees................................... 26,953 28,829 1,876 7,015 7,180 7,160 7,256 7,234 -22 9 Other private services....................................... 61,724 67,268 5,544 15,744 16,504 16,748 16,991 17,024 33 10 U.S. Government miscellaneous services....................... 775 815 40 186 274 157 193 191 -2 11 Income receipts on U.S. assets abroad.......................... 182,659 196,902 14,243 46,513 47,549 48,062 48,696 52,594 3,898 12 Direct investment receipts................................... 88,882 98,260 9,378 22,592 23,538 23,598 23,851 27,273 3,422 13 Other private receipts....................................... 89,064 94,078 5,014 22,835 22,806 23,218 23,578 24,476 898 14 U.S. Government receipts..................................... 4,713 4,564 -149 1,086 1,205 1,246 1,267 845 -422 15 Imports of goods, services, and income...........................-1,082,268 -1,155,101 -72,833 -271,409 -276,975 -288,208 -292,782 -297,139 -4,357 16 Goods, adjusted, excluding military 1/......................... -749,364 -799,343 -49,979 -187,448 -193,159 -200,490 -202,013 -203,681 -1,668 17 Services 2/.................................................... -142,230 -150,440 -8,210 -35,558 -36,578 -37,441 -37,975 -38,450 -475 18 Direct defense expenditures.................................. -9,820 -10,993 -1,173 -2,356 -2,603 -2,775 -2,815 -2,800 15 19 Travel....................................................... -45,855 -48,712 -2,857 -11,541 -12,241 -12,097 -11,867 -12,508 -641 20 Passenger fares.............................................. -14,313 -14,287 26 -3,563 -3,531 -3,557 -3,506 -3,693 -187 21 Other transportation......................................... -29,205 -29,100 105 -7,140 -6,895 -7,288 -7,466 -7,453 13 22 Royalties and license fees................................... -6,312 -7,036 -724 -1,690 -1,595 -1,722 -2,080 -1,639 441 23 Other private services....................................... -33,970 -37,626 -3,656 -8,582 -9,022 -9,390 -9,544 -9,671 -127 24 U.S. Government miscellaneous services....................... -2,755 -2,686 69 -686 -691 -612 -697 -686 11 25 Income payments on foreign assets in the United States......... -190,674 -205,318 -14,644 -48,403 -47,238 -50,277 -52,794 -55,008 -2,214 26 Direct investment payments................................... -31,418 -33,817 -2,399 -7,255 -6,952 -8,720 -9,129 -9,015 114 27 Other private payments....................................... -97,977 -100,159 -2,182 -24,976 -24,122 -24,725 -25,172 -26,140 -968 28 U.S. Government payments..................................... -61,279 -71,342 -10,063 -16,172 -16,164 -16,832 -18,493 -19,853 -1,360 29 Unilateral transfers, net........................................ -35,075 -42,472 -7,397 -9,154 -10,955 -9,420 -9,476 -12,621 -3,145 30 U.S. Government grants......................................... -10,959 -14,634 -3,675 -2,799 -4,259 -2,364 -2,580 -5,431 -2,851 31 U.S. Government pensions and other transfers................... -3,420 -4,233 -813 -731 -1,012 -1,081 -1,064 -1,076 -12 32 Private remittances and other transfers........................ -20,696 -23,605 -2,909 -5,624 -5,684 -5,975 -5,832 -6,114 -282 U.S. International Transactions (Continued) March 13, 1997 [Millions of dollars, seasonally adjusted] 1995 1996 Change: (Credits +, debits -) Change: 1996 1995 1996p 1995-96 IV Ir IIr IIIr IVp III-IV 33 U.S. assets abroad, net(increase/capital outflow (-)).......................-307,856 -306,830 1,026 -98,214 -68,723 -50,699 -73,313 -114,095 -40,782 34 U.S. official reserve assets, net......................................... -9,742 6,668 16,410 191 17 -523 7,489 -315 -7,804 35 Gold.................................................................... .... .... .... .... .... .... .... .... .... 36 Special drawing rights.................................................. -808 370 1,178 -147 -199 -133 848 -146 -994 37 Reserve position in the International Monetary Fund..................... -2,466 -1,280 1,186 -163 -849 -220 -183 -28 155 38 Foreign currencies...................................................... -6,468 7,578 14,046 501 1,065 -170 6,824 -141 -6,965 39 U.S. Government assets, other than official reserve assets, net........... -280 -665 -385 -199 -152 -353 166 -326 -492 40 U.S. credits and other long term assets................................. -4,640 -4,909 -269 -1,199 -1,010 -1,489 -1,124 -1,286 -162 41 Repayments on U.S. credits and other long-term assets................... 4,258 4,155 -103 1,025 1,005 875 1,205 1,070 -135 42 U.S. foreign currency holdings and U.S. short-term assets, net.......... 102 89 -13 -25 -147 261 85 -110 -195 43 U.S. private assets, net..................................................-297,834 -312,833 -14,999 -98,206 -68,588 -49,823 -80,968 -113,454 -32,486 44 Direct investment....................................................... -95,509 -88,304 7,205 -44,117 -23,175 -26,175 -9,143 -29,811 -20,668 45 Foreign securities...................................................... -98,960 -104,533 -5,573 -32,539 -34,420 -20,200 -22,933 -26,980 -4,047 46 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns........................................... -34,219 n.a. n.a. -14,278 -12,707 -3,374 -15,696 n.a. n.a. 47 U.S. claims reported by U.S. banks, not included elsewhere.............. -69,146 -88,219 -19,073 -7,272 1,714 -74 -33,196 -56,663 -23,467 48 Foreign assets in the United States, net (increase/capital inflow(+))....... 424,462 525,046 100,584 99,229 99,475 100,553 142,970 182,048 39,078 49 Foreign official assets in the United States, net......................... 109,757 122,778 13,021 11,369 52,021 13,566 24,235 32,956 8,721 50 U.S. Government securities.............................................. 72,547 115,482 42,935 13,748 55,652 -2,126 26,689 35,267 8,578 51 U.S. Treasury securities.............................................. 68,813 111,151 42,338 12,984 55,600 -3,384 25,472 33,463 7,991 52 Other................................................................. 3,734 4,331 597 764 52 1,258 1,217 1,804 587 53 Other U.S. Government liabilities....................................... 1,082 1,404 322 1,249 -156 220 1,061 279 -782 54 U.S. liabilities reported by U.S. banks, not included elsewhere......... 32,862 4,614 -28,248 -3,908 -3,264 14,187 -1,930 -4,379 -2,449 55 Other foreign official assets........................................... 3,266 1,278 -1,988 280 -211 1,285 -1,585 1,789 3,374 56 Other foreign assets in the United States, net............................ 314,705 402,268 87,563 87,860 47,454 86,987 118,735 149,092 30,357 57 Direct investment....................................................... 60,236 83,950 23,714 14,768 28,694 17,432 21,056 16,768 -4,288 58 U.S. Treasury securities................................................ 99,340 153,784 54,444 1,734 11,832 31,212 43,402 67,338 23,936 59 U.S. securities other than U.S. Treasury securities..................... 95,268 131,682 36,414 27,321 35,993 29,122 34,820 31,747 -3,073 60 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns........................................... 34,578 n.a. n.a. 11,272 6,506 7,296 20,608 n.a. n.a. 61 U.S. liabilities reported by U.S. banks, not included elsewhere......... 25,283 -1,558 -26,841 32,765 -35,571 1,925 -1,151 33,239 34,390 62 Allocations of special drawing rights....................................... .... .... .... .... .... .... .... .... .... 63 Statistical discrepancy (sum of above items with sign reversed)............. 31,548 -53,122 -84,670 29,420 4,522 -9,261 -21,804 -26,573 -4,769 Of which seasonal adjustment discrepancy.................................. .... .... .... 1,153 6,653 -449 -8,318 2,119 10,437 Memoranda: 64 Balance on goods (lines 2 and 16)...........................................-173,424 -187,674 -14,250 -38,026 -43,127 -47,370 -51,869 -45,308 6,561 65 Balance on services (lines 3 and 17)........................................ 68,360 73,467 5,107 18,635 18,497 18,412 17,590 18,963 1,373 66 Balance on goods and services (lines 64 and 65).............................-105,064 -114,207 -9,143 -19,391 -24,630 -28,958 -34,279 -26,345 7,934 67 Balance on investment income (lines 11 and 25).............................. -8,016 -8,416 -400 -1,890 311 -2,215 -4,098 -2,414 1,684 68 Balance on goods, services, and income (lines 1 and 15 or lines 66 and 67) ..................................................................-113,079 -122,623 -9,544 -21,281 -24,319 -31,173 -38,377 -28,759 9,618 69 Unilateral transfers, net (line 29)......................................... -35,075 -42,472 -7,397 -9,154 -10,955 -9,420 -9,476 -12,621 -3,145 70 Balance on current account (lines 1, 15, and 29 or lines 68 and 69).........-148,154 -165,095 -16,941 -30,435 -35,274 -40,593 -47,853 -41,380 6,473 r Revised. p Preliminary. n.a. not available. 1. Adjusted for timing, valuation, and coverage to balance of payments basis; excludes exports under U. S. military agency sales contracts and imports of U. S. military agencies. 2. Includes some goods that cannot be separately identified from services. NOTE:--Details may not add to totals because of rounding. Source: U. S. Department of Commerce, Bureau of Economic Analysis