Home > News > News Release Archive > 2007 > News Release: U.S. International Investment Position, 2006

News Release: U.S. International Investment Position, 2006

Available for this release: Full Release (PDF - KB) | Tables (XLS - KB), Highlights (PDF - KB)


FOR WIRE TRANSMISSION: 8:30 A.M. EDT, THURSDAY, June 28, 2007

Elena L. Nguyen:                (202) 606-9555                        BEA 07-31
Christopher A. Gohrband:        (202) 606-9564



          U.S. Net International Investment Position at Yearend 2006

      The U.S. net international investment position at yearend 2006 was
-$2,539.6 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 2005, the U.S. net international investment position was
-$2,238.4 billion (revised).  The U.S. net international investment position
includes newly introduced comprehensive estimates of U.S. cross-border
transactions and positions in financial derivatives (see box 1).

      The -$301.3 billion change in the U.S. net investment position from
yearend 2005 to yearend 2006 was largely due to especially strong net foreign
purchases of U.S. securities.  The impact of these net purchases was partly
offset by price appreciation of U.S.-held foreign stocks that surpassed by a
large amount price appreciation of foreign-held U.S. stocks, and by exchange-
rate changes resulting from the appreciation of most major foreign currencies
against the U.S. dollar, which raised the dollar value of U.S.-owned assets
abroad.
_______________________________________________________________________________
      Box 1.  Introduction of Comprehensive Data on Financial Derivatives

      BEA is incorporating newly available, comprehensive data on financial
derivatives into the U.S. international investment position. Data are available
for derivatives positions at yearend 2005 and 2006 and for derivatives
transactions (financial flows) in 2006.  Derivatives positions with a positive
value to U.S. residents are recorded as part of U.S.-owned assets abroad, and
derivatives positions with a negative value to U.S. residents are recorded as
part of foreign-owned assets in the United States.  Derivatives transactions
(financial flows) are reported on a net basis and cannot be separated into
transactions for positions with positive value and positions with negative
value.  A discussion of the comprehensive data will appear in the July issue of
the Survey of Current Business.

      The new data are the result of a multiyear effort by the U.S. Treasury
Department, the Federal Reserve Board, the Federal Reserve Bank of New York,
and BEA to close a major gap in the international investment position and
international transactions accounts.
_______________________________________________________________________________

      The following are highlights for 2006:

*     Foreign acquisitions of financial assets in the United States, excluding
      financial derivatives, were $1,859.6 billion in 2006, up from $1,204.2
      billion in 2005.  Both net foreign official purchases of U.S. securities
      and net foreign private purchases of U.S. securities other than Treasury
      securities were especially strong; increases in liabilities reported by
      U.S. banks and U.S. nonbanks accelerated from last yearís pace; and
      foreign direct investment in the United States picked up.

*     U.S. acquisitions of financial assets abroad, excluding financial
      derivatives, were $1,055.2 billion in 2006, up from $426.9 billion in
      2005.  U.S. direct investment abroad rebounded strongly; increases in
      claims reported by U.S. banks and U.S. nonbanks accelerated from last
      yearís pace; and net U.S. purchases of foreign securities were a record.

*     Price appreciation in most foreign stock markets substantially increased
      the value of U.S. holdings of foreign corporate stocks.  Price
      appreciation in the U.S. stock market also increased the value of foreign
      holdings of U.S. corporate stocks, but by a much smaller amount.

*     Appreciation of most major foreign currencies against the U.S. dollar
      from yearend 2005 to yearend 2006 raised the dollar value of U.S.-owned
      assets abroad, especially the value of U.S.-owned foreign corporate
      stocks.


      U.S.-owned assets abroad increased $2,178.7 billion to $13,755.0 billion.

      U.S. holdings of foreign securities increased $1,086.4 billion to
$5,432.3 billion.  Holdings of foreign stocks increased as a result of large
price appreciation, foreign-currency appreciation, and net U.S. purchases.
Holdings of foreign bonds increased mostly as a result of net U.S. purchases.

      The stock of U.S. direct investment abroad at current cost increased
$320.4 billion to $2,855.6 billion, mostly as a result of net financial flows
(see box 2).

      Claims on foreigners reported by U.S. banks increased $583.4 billion to
$3,089.0 billion.

      Claims on unaffiliated foreigners reported by U.S. nonbanking concerns
increased $114.4 billion to $848.5 billion.

      U.S. holdings of financial derivatives with positive fair value increased
$47.5 billion to $1,237.6 billion.

      U.S. official reserve assets increased $31.8 billion to $219.9 billion.


      Foreign-owned assets in the United States increased $2,479.9 billion to
$16,294.6 billion.

      Foreign official assets in the United States increased $463.9 billion to
$2,770.2 billion.  Net foreign purchases of U.S. Government securities
accounted for most of the increase.

      Foreign private holdings of U.S. securities other than U.S. Treasury
securities increased $875.5 billion to $5,228.5 billion.  Foreign holdings of
U.S. bonds increased mostly as a result of strong net foreign purchases.
Foreign holdings of U.S. stocks increased as a result of price appreciation and
net foreign purchases.

      U.S. liabilities to private foreigners and international financial
institutions reported by U.S. banks increased $717.3 billion to $3,319.0
billion.

      The stock of foreign direct investment in the United States at current
cost increased $231.2 billion to $2,099.4 billion, mostly as a result of net
financial flows (see box 2).

      Liabilities to unaffiliated foreigners reported by U.S. nonbanking
concerns increased $182.5 billion to $740.4 billion.

      U.S. holdings of financial derivatives with negative fair value increased
$46.5 billion to $1,178.6 billion.

      U.S. currency held by foreigners increased $12.6 billion to $364.3
billion.

      Foreign private holdings of U.S. Treasury securities decreased $49.6
billion to $594.2 billion, mostly as a result of net foreign sales.

_______________________________________________________________________________
               Box 2.  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 2005 was -$2,693.8 billion.  The revised position estimates reflect
newly introduced comprehensive data on U.S. cross-border transactions and
positions in financial derivatives; the new data begin with the 2005 yearend
position.  U.S. holdings of foreign securities for 2005 were revised to
incorporate results from the U.S. Treasury Departmentís annual survey of
securities claims for December 2005.  Foreign holdings of U.S. Treasury
securities, other U.S. securities, and short-term instruments reported by U.S.
banks were revised for 2004-2005 to incorporate results from the U.S. Treasury
Departmentís annual surveys of securities liabilities for June 2005 (revised)
and June 2006.

      In addition to the above improvements, all estimates were revised as a
result of newly available or revised quarterly source data.  Revisions
attributable to these updated source data were for 2003-2005.  The net result
of revisions from all sources raised the value of U.S. assets abroad relative
to the value of foreign assets in the United States for 2004-2005.  For 2003,
the net result of revisions from all sources lowered the value of U.S. assets
abroad relative to the value of foreign assets in the United States.

      A more detailed discussion of the U.S. net international investment
position at yearend 2006 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.


                            *          *          *


      BEAís national, international, regional, and industry estimates; the
Survey of Current Business; and BEA news releases are available without charge
on BEAís 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, 2005 and 2006
[Millions of dollars]



                                                                                                                    Changes in position in 2006 (decrease (-), increase (+))


                                                                                                                    Attributable to:

                                                                                                                                Valuation adjustments
 Line                                     Type of investment
                                                                                                        Position,                                                        Position,
                                                                                                        2005 r                           Exchange-                       2006 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)............................  -2,238,359   -833,183   347,585   220,653   -36,325   -301,270  -2,539,629
  2   Financial derivatives, net (line 5 less line 25) /3/............................................      57,915    -28,762       /4/       /4/ /4/29,782      1,020      58,935
  3   Net international investment position, excluding financial derivatives (line 6 less line 26)....  -2,296,274   -804,421   347,585   220,653   -66,107   -302,290  -2,598,564

  4   U.S.-owned assets abroad (lines 5+6)............................................................  11,576,336        /3/       /3/       /3/       /3/  2,178,654  13,754,990
  5     Financial derivatives, gross positive fair value..............................................   1,190,029        /3/       /3/       /3/       /3/     47,535   1,237,564
  6     U.S.-owned assets abroad, excluding financial derivatives (lines 7+12+17).....................  10,386,307  1,055,176   675,909   268,603   131,431  2,131,119  12,517,426

  7     U.S. official reserve assets..................................................................     188,043     -2,374    31,123     3,092       -31     31,810     219,853
  8       Gold........................................................................................     134,175          0 /5/31,123     .....    /6/-31     31,092     165,267
  9       Special drawing rights......................................................................       8,210        223     .....       437         0        660       8,870
 10       Reserve position in the International Monetary Fund.........................................       8,036     -3,331     .....       335         0     -2,996       5,040
 11       Foreign currencies..........................................................................      37,622        734     .....     2,320         0      3,054      40,676

 12     U.S. Government assets, other than official reserve assets....................................      77,523     -5,346     .....     .....        12     -5,334      72,189
 13       U.S. credits and other long-term assets /7/.................................................      76,960     -5,337     .....     .....        12     -5,325      71,635
 14          Repayable in dollars.....................................................................      76,687     -5,337     .....     .....        12     -5,325      71,362
 15          Other /8/................................................................................         273          0     .....     .....     .....          0         273
 16       U.S. foreign currency holdings and U.S. short-term assets...................................         563         -9     .....     .....     .....         -9         554

 17     U.S. private assets...........................................................................  10,120,741  1,062,896   644,786   265,511   131,450  2,104,643  12,225,384
 18       Direct investment at current cost...........................................................   2,535,188    235,358    46,009    39,188      -124    320,431   2,855,619
 19       Foreign securities..........................................................................   4,345,884    289,422   598,777   198,181         0  1,086,380   5,432,264
 20          Bonds....................................................................................   1,028,179    150,884   -12,032    13,727         0    152,579   1,180,758
 21          Corporate stocks.........................................................................   3,317,705    138,538   610,809   184,454         0    933,801   4,251,506
 22       U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.................     734,034     83,531     .....    13,075    17,824    114,430     848,464
 23       U.S. claims reported by U.S. banks, not included elsewhere..................................   2,505,635    454,585     .....    15,067   113,750    583,402   3,089,037

 24   Foreign-owned assets in the United States (lines 25+26).........................................  13,814,695        /3/       /3/       /3/       /3/  2,479,924  16,294,619
 25     Financial derivatives, gross negative fair value..............................................   1,132,114        /3/       /3/       /3/       /3/     46,515   1,178,629
 26     Foreign-owned assets in the Unites States, excluding financial derivatives (lines 27+34).. ...  12,682,581  1,859,597   328,324    47,950   197,538  2,433,409  15,115,990

 27     Foreign official assets in the United States..................................................   2,306,292    440,264    20,840     .....     2,769    463,873   2,770,165
 28       U.S. Government securities..................................................................   1,725,193    380,734    -8,563     .....     7,332    379,503   2,104,696
 29          U.S. Treasury securities.................................................................   1,340,598    189,181    -8,600     .....      -411    180,170   1,520,768
 30          Other....................................................................................     384,595    191,553        37     .....     7,743    199,333     583,928
 31       Other U.S. Government liabilities /9/.......................................................      15,866      3,133     .....     .....         0      3,133      18,999
 32       U.S. liabilities reported by U.S. banks, not included elsewhere.............................     296,647     22,040     .....     .....   -22,000         40     296,687
 33       Other foreign official assets...............................................................     268,586     34,357    29,403     .....    17,437     81,197     349,783

 34     Other foreign assets..........................................................................  10,376,289  1,419,333   307,484    47,950   194,769  1,969,536  12,345,825
 35       Direct investment at current cost...........................................................   1,868,245    180,580    32,495     3,916    14,190    231,181   2,099,426
 36       U.S. Treasury securities....................................................................     643,793    -35,931    -9,233     .....    -4,386    -49,550     594,243
 37       U.S. securities other than U.S. Treasury securities.........................................   4,352,998    591,951   284,222    25,419   -26,054    875,538   5,228,536
 38          Corporate and other bonds................................................................   2,243,135    449,194   -12,143    25,419   -15,789    446,681   2,689,816
 39          Corporate stocks.........................................................................   2,109,863    142,757   296,365     .....   -10,265    428,857   2,538,720
 40       U.S. currency...............................................................................     351,706     12,571     .....     .....         0     12,571     364,277
 41       U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns............     557,840    235,769     .....     9,605   -62,849    182,525     740,365
 42       U.S. liabilities reported by U.S. banks, not included elsewhere.............................   2,601,707    434,393     .....     9,010   273,868    717,271   3,318,978

    Memoranda:
 43 Direct investment abroad at market value..........................................................   3,570,252    235,358   393,709   179,732    -1,221    807,578   4,377,830
 44 Direct investment in the United States at market value............................................   2,806,029    180,580   226,483     .....     9,387    416,450   3,222,479

p Preliminary
r Revised
..... 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, capital gains and losses of direct investment affiliates, and other adjustments to the value of assets and liabilities.
3. Financial flows and valuation adjustments for financial derivatives are available only on a net basis; they are not separately available for gross positive fair values and
   gross negative fair values of financial derivatives.  Consequently, financial flows and valuation adjustments for financial derivatives are shown only on line 2; 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