FOR WIRE TRANSMISSION: 8:30 A.M. EDT, FRIDAY, June 27, 2008 Elena L. Nguyen: (202) 606-9555 BEA 08-32 Christopher A. Gohrband: (202) 606-9564 U.S. Net International Investment Position at Yearend 2007 The U.S. net international investment position at yearend 2007 was -$2,441.8 billion (preliminary), as the value of foreign investments in the United States continued to exceed the value of U.S. investments abroad (table 1). At yearend 2006, the U.S. net international investment position was -$2,225.8 billion (revised). The -$216.0 billion change in the U.S. net investment position from yearend 2006 to yearend 2007 reflected net foreign acquisitions of financial assets in the United States that substantially exceeded net U.S. acquisitions of financial assets abroad. The impact of this disparity was partly offset by large exchange-rate changes resulting from strong appreciation of most major foreign currencies against the U.S. dollar, which raised the dollar value of U.S.-owned assets abroad, and by price appreciation of U.S.-held foreign stocks that surpassed by a large amount the price appreciation of foreign-held U.S. stocks. The following are highlights for 2007: * Foreign acquisitions of financial assets in the United States, excluding financial derivatives, were $2,057.7 billion in 2007, down slightly from acquisitions of $2,061.1 billion in 2006. In 2007, net foreign private purchases of U.S. securities and increases in liabilities reported by U.S. banks were especially strong. Net foreign official acquisitions of U.S. assets and foreign direct investment in the United States remained robust. * U.S. acquisitions of financial assets abroad, excluding financial derivatives, were $1,289.9 billion in 2007, up slightly from acquisitions of $1,251.7 billion in 2006. In 2007, increases in claims reported by U.S. banks and U.S. direct investment abroad were especially strong. Net U.S. purchases of foreign securities declined somewhat but remained robust. * Appreciation of most major foreign currencies against the U.S. dollar from yearend 2006 to yearend 2007 substantially raised the dollar value of U.S.-owned assets abroad, especially the value of U.S.-owned foreign stocks. * Price appreciation in most foreign stock markets increased the value of U.S. holdings of foreign stocks by a large amount. Price appreciation in the U.S. stock market also increased the value of foreign holdings of U.S. stocks, but by a much smaller amount. U.S.-owned assets abroad increased $3,258.7 billion to $17,640.0 billion. U.S. holdings of financial derivatives with positive fair value increased $1,045.6 billion to $2,284.6 billion. U.S. holdings of foreign securities increased $1,044.2 billion to $6,648.7 billion. Holdings of foreign stocks increased as a result of foreign- currency appreciation, price appreciation, and net U.S. purchases. Holdings of foreign bonds increased mostly as a result of net U.S. purchases. Claims on foreigners reported by U.S. banks increased $679.4 billion to $3,826.2 billion. The stock of U.S. direct investment abroad at current cost increased $396.9 billion to $3,332.8 billion, mostly as a result of net financial flows (see box). Claims on unaffiliated foreigners reported by U.S. nonbanking concerns increased $12.9 billion to $1,176.0 billion. U.S. official reserve assets increased $57.4 billion to $277.2 billion. U.S. government assets other than official reserve assets increased $22.3 billion to $94.5 billion. Foreign-owned assets in the United States increased $3,474.7 billion to $20,081.8 billion. U.S. holdings of financial derivatives with negative fair value increased $1,021.9 billion to $2,201.1 billion. Foreign official assets in the United States increased $511.4 billion to $3,337.0 billion. Foreign private holdings of U.S. securities other than U.S. Treasury securities increased $760.1 billion to $6,132.4 billion. Foreign holdings of U.S. bonds increased mostly as a result of net foreign purchases. Foreign holdings of U.S. stocks increased as a result of net foreign purchases and price appreciation. Liabilities to private foreigners reported by U.S. banks increased $591.9 billion to $4,022.2 billion. The stock of foreign direct investment in the United States at current cost increased $271.2 billion to $2,422.8 billion, mostly as a result of net financial flows (see box below). Foreign private holdings of U.S. Treasury securities increased $166.9 billion to $734.8 billion as a result of especially strong net foreign purchases. Liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns increased $162.0 billion to $959.5 billion. U.S. currency held by foreigners decreased $10.7 billion to $272.0 billion. _______________________________________________________________________________ Valuation Methods for Direct Investment Direct investment at current cost is BEA's featured measure of direct investment in current-period prices. The current-cost method values the U.S. and foreign parents' share of their affiliates' investment in plant and equipment using the current cost of capital equipment, in land using general price indexes, and in inventories using estimates of their replacement cost. Direct investment at market value is an alternative measure of direct investment in current-period prices. The market-value method values the owners' equity component of the direct investment position using indexes of stock market prices. The historical-cost method values assets and liabilities at their book value. Country and industry detail can be shown only under this method. Data on this basis are not presented in this release. _______________________________________________________________________________ * * * Revisions The previously published U.S. net international investment position at yearend 2006 was -$2,539.6 billion. The revised position estimates reflect the incorporation of results from BEA’s benchmark survey of U.S. direct investment abroad for 2004, and the incorporation of results from the U.S. Treasury Department’s benchmark survey of securities claims for December 2006 and annual survey of securities liabilities for June 2007. The U.S. net investment position was also revised for 1976-2006 as a result of improved estimates of U.S. currency shipments. In addition to the inclusion of benchmark and improved source data, estimates were revised to incorporate newly available or revised quarterly source data. Revisions attributable to these updated source data were for 2002- 2006. The net result of revisions from all sources lowered the U.S. net international investment position by small amounts for 2002-2004, and by much larger amounts for 2005 and 2006. A more detailed discussion of the U.S. net international investment position at yearend 2007 and revised historical data will appear in the July issue of the Survey of Current Business. That issue will also contain an article about historical-cost direct investment positions, with detail by country and industry, and revised direct investment historical data. * * * 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. Table 1. International Investment Position of the United States at Yearend, 2006 and 2007 [Millions of dollars] Changes in position in 2007 (decrease (-), increase (+)) Attributable to: Valuation adjustments Line Type of investment Position, Position, 2006 r Exchange- 2007 p Financial Price rate Other flows changes changes/1/ changes/2/ Total (a) (b) (c) (d) (a+b+c+d) 1 Net international investment position of the United States (lines 2+3)................................ -2,225,804 -774,345 197,683 438,711 -78,074 -216,025 -2,441,829 2 Financial derivatives, net (line 5 less line 25) /3/................................................ 59,836 -6,496 /4/ /4/ /4/30,189 23,693 83,529 3 Net international investment position, excluding financial derivatives (line 6 less line 26)........ -2,285,640 -767,849 197,683 438,711 -108,263 -239,718 -2,525,358 4 U.S.-owned assets abroad (lines 5+6)................................................................ 14,381,297 /3/ /3/ /3/ /3/ 3,258,657 17,639,954 5 Financial derivatives (gross positive fair value)................................................. 1,238,995 /3/ /3/ /3/ /3/ 1,045,586 2,284,581 6 U.S.-owned assets abroad, excluding financial derivatives (lines 7+12+17)......................... 13,142,302 1,289,854 420,581 516,968 -14,332 2,213,071 15,355,373 7 U.S. official reserve assets...................................................................... 219,853 122 52,758 4,478 0 57,358 277,211 8 Gold............................................................................................ 165,267 0 /5/52,758 ..... /6/0 52,758 218,025 9 Special drawing rights.......................................................................... 8,870 154 ..... 452 0 606 9,476 10 Reserve position in the International Monetary Fund............................................. 5,040 -1,021 ..... 225 0 -796 4,244 11 Foreign currencies.............................................................................. 40,676 989 ..... 3,801 0 4,790 45,466 12 U.S. government assets, other than official reserve assets........................................ 72,189 22,273 ..... ..... 9 22,282 94,471 13 U.S. credits and other long-term assets /7/..................................................... 71,635 -1,629 ..... ..... 9 -1,620 70,015 14 Repayable in dollars.......................................................................... 71,362 -1,629 ..... ..... 9 -1,620 69,742 15 Other /8/..................................................................................... 273 0 ..... (*) ..... 0 273 16 U.S. foreign currency holdings and U.S. short-term assets....................................... 554 23,902 ..... (*) ..... 23,902 24,456 17 U.S. private assets............................................................................... 12,850,260 1,267,459 367,823 512,490 -14,341 2,133,431 14,983,691 18 Direct investment at current cost............................................................... 2,935,977 333,271 25,579 69,631 -31,630 396,851 3,332,828 19 Foreign securities.............................................................................. 5,604,475 288,731 342,244 413,236 0 1,044,211 6,648,686 20 Bonds......................................................................................... 1,275,515 170,708 3,918 27,946 0 202,572 1,478,087 21 Corporate stocks.............................................................................. 4,328,960 118,023 338,326 385,290 0 841,639 5,170,599 22 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns..................... 1,163,102 706 ..... 12,329 -110 12,925 1,176,027 23 U.S. claims reported by U.S. banks, not included elsewhere...................................... 3,146,706 644,751 ..... 17,294 17,399 679,444 3,826,150 24 Foreign-owned assets in the United States (lines 25+26)............................................. 16,607,101 /3/ /3/ /3/ /3/ 3,474,682 20,081,783 25 Financial derivatives (gross negative fair value)................................................. 1,179,159 /3/ /3/ /3/ /3/ 1,021,893 2,201,052 26 Foreign-owned assets in the Unites States, excluding financial derivatives (lines 27+34).......... 15,427,942 2,057,703 222,898 78,257 93,931 2,452,789 17,880,731 27 Foreign official assets in the United States...................................................... 2,825,628 411,058 84,554 ..... 15,790 511,402 3,337,030 28 U.S. government securities...................................................................... 2,167,112 230,330 73,387 ..... 32,002 335,719 2,502,831 29 U.S. Treasury securities...................................................................... 1,558,317 58,865 54,397 ..... 25,786 139,048 1,697,365 30 Other......................................................................................... 608,795 171,465 18,990 ..... 6,216 196,671 805,466 31 Other U.S. government liabilities /9/........................................................... 18,682 5,342 ..... ..... 0 5,342 24,024 32 U.S. liabilities reported by U.S. banks, not included elsewhere................................. 297,012 108,695 ..... ..... 0 108,695 405,707 33 Other foreign official assets................................................................... 342,822 66,691 11,167 ..... -16,212 61,646 404,468 34 Other foreign assets.............................................................................. 12,602,314 1,646,645 138,344 78,257 78,141 1,941,387 14,543,701 35 Direct investment at current cost............................................................... 2,151,616 237,542 18,628 3,935 11,075 271,180 2,422,796 36 U.S. Treasury securities........................................................................ 567,885 156,825 22,362 ..... -12,296 166,891 734,776 37 U.S. securities other than U.S. Treasury securities............................................. 5,372,361 573,850 97,354 52,974 35,899 760,077 6,132,438 38 Corporate and other bonds.................................................................... 2,824,879 391,440 -5,867 52,974 35,899 474,446 3,299,325 39 Corporate stocks............................................................................. 2,547,482 182,410 103,221 ..... 0 285,631 2,833,113 40 U.S. currency................................................................................... 282,627 -10,675 ..... ..... 0 -10,675 271,952 41 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns................ 797,495 156,290 ..... 6,895 -1,136 162,049 959,544 42 U.S. liabilities reported by U.S. banks, not included elsewhere................................. 3,430,330 532,813 ..... 14,453 44,599 591,865 4,022,195 Memoranda: 43 Direct investment abroad at market value.............................................................. 4,454,635 333,271 108,353 267,198 -15,505 693,317 5,147,952 44 Direct investment in the United States at market value................................................ 3,293,739 237,542 6,264 ..... -13,945 229,861 3,523,600 p Preliminary r Revised * Less than $500,000 (+/-) ..... Not applicable 1. Represents gains or losses on foreign-currency-denominated assets and liabilities due to their revaluation at current exchange rates. 2. Includes changes in coverage due to year-to-year changes in the composition of reporting panels, primarily for bank and nonbank estimates, and to the incorporation of survey results. Also includes capital gains and losses of direct investment affiliates and changes in positions that cannot be allocated to financial flows, price changes, or exchange-rate changes. 3. Financial flows and valuation adjustments for financial derivatives are available only on a net basis, which is shown on line 2; they are not separately available for gross positive fair values and gross negative fair values of financial derivatives. Consequently, columns (a) through (d) on lines 4, 5 and 24, 25 are not available. 4. Data are not separately available for the three types of valuation adjustments; therefore, the sum of all three types is shown in column (d). Price changes result from changes in the value of derivatives contracts due to changes in the value of their underlying assets or reference rates, which may arise from movements in interest rates, stock prices, commodity prices, or other variables. Exchange-rate changes result from the revaluation of foreign-currency-denominated derivatives contracts at current exchange rates. "Other changes" can result when data on investment positions that had accumulated in prior periods are covered by a new or more complete survey. 5. Reflects changes in the value of the official gold stock due to fluctuations in the market price of gold. 6. Reflects changes in gold stock from U.S. Treasury sales of gold medallions and commemorative and bullion coins; also reflects replenishment through open market purchases. These demonetizations/monetizations are not included in international transactions financial flows. 7. Also includes paid-in capital subscriptions to international financial institutions and outstanding amounts of miscellaneous claims that have been settled through international agreements to be payable to the U.S. government over periods in excess of 1 year. Excludes World War I debts that are not being serviced. 8. Includes indebtedness that the borrower may contractually, or at its option, repay with its currency, with a third country's currency, or by delivery of materials or transfer of services. 9. Primarily U.S. government liabilities associated with military sales contracts and other transactions arranged with or through foreign official agencies. Source: Bureau of Economic Analysis