News Release: U.S. International Transactions

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EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, THURSDAY, MARCH 19, 2015
BEA 15-11


William Zeile: (202) 606-9893 (Data)
U.S. International Transactions: Fourth Quarter and Year 2014


                                        Current Account

The U.S. current-account deficit—a net measure of transactions between the United States and
the rest of the world in goods, services, primary income (investment income and compensation),
and secondary income (current transfers)—increased to $113.5 billion (preliminary) in the
fourth quarter of 2014 from $98.9 billion (revised) in the third quarter. The deficit increased
to 2.6 percent of current-dollar gross domestic product (GDP) from 2.2 percent in the third
quarter. The increase in the current-account deficit was primarily accounted for by a decrease
in the surplus on primary income. In addition, the deficits on goods and secondary income
increased. These changes were partly offset by an increase in the surplus on services.

_______________________________________________________________________________________________

    Notice About the 2015 Annual Revision of the U.S. International Transactions Accounts

The annual revision of the U.S. international transactions accounts will be released along with
preliminary estimates for the first quarter of 2015 on June 18, 2015. An article previewing
the annual revisions will appear in the April 2015 issue of the Survey of Current Business.
_______________________________________________________________________________________________


Goods and services

      The deficit on goods and services increased to $127.0 billion in the fourth quarter from
$123.9 billion in the third quarter.

      Goods  The deficit on goods increased to $185.2 billion in the fourth quarter from
$181.1 billion in the third quarter.

      Goods exports decreased to $410.1 billion from $415.0 billion. Exports decreased in three
of the six major general-merchandise end-use categories. The largest decrease was in industrial
supplies and materials; exports also decreased in automotive vehicles, parts, and engines and
in consumer goods except food and automotive. The decrease in industrial supplies and
materials—which more than accounted for the total decrease in general merchandise exports—
mostly reflected a decrease in exports of petroleum and products. The decrease in automotive
vehicles, parts, and engines was more than accounted for by a decrease in exports of passenger
cars. Exports increased in nonmonetary gold and in three major general-merchandise end-use
categories. The largest general-merchandise increase was in foods, feeds, and beverages; the
increase was more than accounted for by an increase in exports of soybeans, which was partly
offset by a decrease in exports of grains and preparations (ITA Table 2.1).

      Goods imports decreased to $595.3 billion from $596.1 billion. Imports decreased in three
of the six major general-merchandise end-use categories and in nonmonetary gold. The largest
decrease—which more than accounted for the total decrease in goods imports—was in industrial
supplies and materials; as with exports, the decrease mostly reflected a decrease in petroleum
and products. The largest increase was in consumer goods except food and automotive, mostly
reflecting an increase in other household goods, including cell phones (ITA Table 2.1).

      Services  The surplus on services increased to $58.2 billion in the fourth quarter from
$57.2 billion in the third quarter.

      Services exports increased to $180.4 billion from $176.6 billion. Exports increased in
all nine major services categories. The largest increases were in financial services and in
travel (for all purposes including education).  The increase in financial services was largely
due to increases in financial management, financial advisory, and custody services and in
securities brokerage, underwriting, and related services.  The increase in travel (for all
purposes including education) reflected an increase in personal travel that was partly offset
by a decrease in business travel (ITA Table 3.1).

      Services imports increased to $122.3 billion from $119.5 billion. Imports increased in
seven of the nine major services categories. The largest increase was in travel (for all
purposes including education), mainly reflecting an increase in business travel; personal
travel also increased (ITA Table 3.1).

Primary income

      The surplus on primary income decreased to $50.6 billion in the fourth quarter from $59.8
billion in the third quarter.

      Investment income  Income receipts from foreigners on U.S. holdings of financial assets
abroad decreased to $201.3 billion from $210.0 billion (ITA Table 4.1).
The decrease was more than accounted for by a decrease in direct investment income on equity
from foreign affiliates in all major industries (ITA Table 4.2).

      Income payments to foreigners on U.S. liabilities increased to $148.4 billion from $147.8
billion (ITA Table 4.1).  The increase was more than accounted for by an increase in portfolio investment income
payments, mainly due to increased interest on long-term debt securities (ITA Table 4.3). The increase in
portfolio investment income payments was partly offset by a decrease in direct investment
income payments, mostly reflecting a decrease in income on equity (ITA Table 4.2).

      Compensation of employees  Receipts for compensation of U.S. residents paid by
nonresidents was nearly unchanged at $1.7 billion in the fourth quarter. Payments for
compensation of foreign residents paid by U.S. residents increased to $4.1 billion from $4.0
billion.

Secondary income (current transfers)

      The deficit on secondary income increased to $37.0 billion in the fourth quarter from
$34.8 billion in the third quarter. Secondary income receipts and payments include U.S.
government and private transfers, such as U.S. government grants and pensions, fines and
penalties, withholding taxes, personal transfers (remittances), insurance-related transfers,
and other current transfers.

      Secondary income receipts decreased to $27.3 billion from $28.0 billion; the decrease was
more than accounted for by a decrease in private transfers, primarily insurance-related
transfers (ITA Table 5.1).

      Secondary income payments increased to $64.4 billion from $62.8 billion, mostly
reflecting an increase in private transfers, primarily fines and penalties and withholding
taxes (ITA Table 5.1).

                                        Capital Account

      Capital-account receipts for the fourth quarter were zero and capital-account payments
are not available because source data are not yet available. Source data on fourth-quarter
capital-account payments will be incorporated with the release of the 2015 first-quarter U.S.
International Transactions on June 18, 2015. In the third quarter, capital-account receipts and
payments were zero.

                                       Financial Account

      Net U.S. borrowing measured by financial-account transactions was $10.8 billion in the
fourth quarter, down from $22.0 billion in the third quarter. Both net U.S. acquisition of
financial assets excluding financial derivatives and net U.S. incurrence of liabilities
excluding financial derivatives decreased in the fourth quarter, but the incurrence of
liabilities decreased more. Net transactions in financial derivatives other than reserves
reflected more net borrowing than in the third quarter.

Net U.S. acquisition of financial assets excluding financial derivatives

      Net U.S. acquisition of financial assets excluding financial derivatives was $77.2
billion in the fourth quarter, down from $353.0 billion in the third quarter.

      Direct investment assets (equity and debt instruments)  Net acquisition of direct
investment assets was $128.3 billion in the fourth quarter, up from $96.8 billion in the third
quarter. The increase was largely due to an increase in net acquisition of equity other than
reinvestment of earnings. Also contributing to the increase was a shift to net acquisition of
debt instrument assets by U.S. affiliates (ITA Table 6.1).

      Portfolio investment assets (equity and investment fund shares and debt securities)  Net
U.S. acquisition of portfolio investment assets abroad was $89.8 billion in the fourth quarter,
down from $161.5 billion in the third quarter. Transactions in foreign debt securities shifted
to net U.S. sales of $46.6 billion from net U.S. purchases of $33.5 billion, a shift largely
accounted for by a shift to net sales of corporate bonds and notes. In contrast, net U.S.
purchases of foreign equity and investment fund shares increased to $136.4 billion from $128.0
billion (ITA Table 7.1).

      Other investment assets (currency and deposits, loans, insurance technical reserves, and
trade credit and advances) Net U.S. sales of other investment assets abroad (sales in excess of
acquisitions) were $138.4 billion in the fourth quarter, a shift from net acquisition of $95.7
billion in the third quarter. The shift to net sales reflected shifts to net U.S. withdrawals
of deposits abroad and net foreign repayment of U.S. loans to foreign residents (ITA Table 8.1).

      Reserve assets  Transactions in U.S. reserve assets decreased holdings by $2.5 billion in
the fourth quarter, after decreasing holdings by $0.9 billion in the third quarter.  The
decreases in both quarters reflected decreases in the U.S. reserve position in the
International Monetary Fund.

Net U.S. incurrence of liabilities excluding financial derivatives

      Net U.S. incurrence of liabilities to foreigners excluding financial derivatives was
$56.2 billion in the fourth quarter, down from $350.7 billion in the third quarter.

      Direct investment liabilities (equity and debt instruments) Net incurrence of direct
investment liabilities to foreigners was $49.7 billion in the fourth quarter, down from $86.4
billion in the third quarter. The decrease was largely accounted for by a shift to net
repayment from net incurrence of debt instrument liabilities, reflecting a shift to net
repayment by U.S. parent companies and a reduction in net incurrence by U.S. affiliates. Lower
fourth-quarter net incurrence of liabilities in equity other than reinvestment of earnings also
contributed to the decrease in the net incurrence of direct investment liabilities (ITA Table
6.1).

      Portfolio investment liabilities (equity and investment fund shares and debt securities)
Net U.S. incurrence of portfolio investment liabilities to foreigners was $145.8 billion in the
fourth quarter, down from $241.1 billion in the third quarter. Net foreign sales of U.S. equity
and investment fund shares were $12.6 billion, a shift from net foreign purchases of $85.4
billion. Net foreign purchases of U.S. debt securities were $158.4 billion, up from $155.7
billion (ITA Table 7.1).

      Other investment liabilities (currency and deposits, loans, insurance technical reserves,
trade credit and advances, and special drawing rights allocations)  Net U.S. repayment
(repayments in excess of incurrences) of other investment liabilities to foreigners was $139.3
billion in the fourth quarter, a shift from net incurrence of $23.2 billion in the third
quarter. The shift reflected a shift to net withdrawals of foreign-resident deposits (ITA Table
8.1).

Financial derivatives other than reserves

      Net transactions in financial derivatives other than reserves were –$31.7 billion in the
fourth quarter, representing net borrowing. This was an increase from net borrowing of $24.3
billion in the third quarter. The fourth-quarter increase reflected the appreciation of the
dollar as over-the-counter and exchange-traded contracts written to hedge currency exposures
resulted in higher net cash receipts to U.S. residents (net borrowing). Transactions in
financial derivatives are only available as a net value equal to transactions for assets less
transactions for liabilities. A positive value represents net cash payments by U.S. residents
to foreign residents from settlements of derivatives contracts (net lending) and a negative
value represents net U.S. cash receipts (net borrowing).

                                   Statistical discrepancy

      The statistical discrepancy is the difference between net acquisition of assets and net
incurrence of liabilities in the financial account (including financial derivatives) less the
difference between total credits and total debits recorded in the current and capital
accounts. The statistical discrepancy was $102.7 billion in the fourth quarter compared with
$76.9 billion in the third quarter.

                                   *          *          *

      In the fourth quarter, the U.S. dollar appreciated 6.2 percent on a trade-weighted
quarterly average basis against a group of 7 major currencies, after appreciating 1.9 percent
on the same basis in the third quarter. Exchange rate data are based on Federal Reserve
Statistical Release H.10.

                                   *          *          *


                                         The Year 2014

                                        Current Account

      The U.S. current-account deficit increased to $410.6 billion (preliminary) in 2014 from
$400.3 billion in 2013. The deficit was 2.4 percent of current-dollar GDP in both 2014 and
2013.

Goods and services

      The deficit on goods and services increased to $504.7 billion in 2014 from $476.4
billion in 2013.

      Goods   The deficit on goods increased to $735.8 billion in 2014 from $701.7 billion in
2013.

      Goods exports increased to $1,635.1 billion from $1,592.8 billion. Exports increased in
all six major general-merchandise end-use categories but decreased in nonmonetary gold. The
largest increases were in capital goods except automotive, in consumer goods except food and
automotive, and in industrial supplies and materials. The increase in capital goods except
automotive reflected increases in machinery and equipment except consumer-type and in civilian
aircraft, engines, and parts. The increase in consumer goods except food and automotive was
largely accounted for by an increase in durable goods. The increase in industrial supplies and
materials was mostly accounted for by an increase in exports of petroleum and products (ITA
Table 2.1).

      Goods imports increased to $2,370.9 billion from $2,294.5 billion. Imports increased in
five of the six major general-merchandise end-use categories. The largest increases were in
capital goods except automotive and in consumer goods except food and automotive. The increase
in capital goods except automotive was mostly accounted for by increases in machinery and
equipment except consumer-type. The increase in consumer goods except food and automotive
partly reflected increases in imports of medicinal, dental, and pharmaceutical products and in
other household goods, including cell phones. Imports decreased in industrial supplies and
materials, a decrease that was more than accounted for by a decrease in imports of petroleum
and products (ITA Table 2.1).

      Services   The surplus on services increased to $231.1 billion in 2014 from $225.3
billion in 2013.

      Services exports increased to $709.4 billion from $687.4 billion. Exports increased in
seven of the nine major services categories. The largest increases were in other business
services—particularly professional and management consulting services and research and
development services—and in financial services (ITA Table 3.1).

      Services imports increased to $478.3 billion from $462.1 billion. Imports increased in
six of the nine major categories. The largest increase was in travel (for all purposes
including education), specifically in personal travel. Increases in other business services
and in transport also contributed to the increase in services imports (ITA Table 3.1).

Primary income

      The surplus on primary income increased to $217.9 billion in 2014 from $199.7 billion in
2013.

      Investment income  Income receipts from foreigners on U.S. holdings of financial assets
abroad increased to $812.8 billion from $773.4 billion (ITA Table 4.1).
The increase was largely accounted for by an increase in portfolio investment income,
particularly income receipts on equity and investment fund shares by financial institutions
other than deposit-taking institutions (ITA Table 4.3). Direct investment income receipts also increased, 
reflecting an increase in reinvested earnings (ITA Table 4.2).

      Income payments to foreigners on U.S. liabilities increased to $585.9 billion from $564.9
billion (ITA Table 4.1).   The increase mostly reflected an increase in portfolio investment
income payments, primarily on equity and investment fund shares of nonfinancial institutions
(ITA Table 4.3).  Direct investment income payments also increased. Other investment income payments decreased.

      Compensation of employees  Receipts for compensation of U.S. residents paid by
nonresidents increased to $6.9 billion from $6.7 billion. Payments for compensation of foreign
residents paid by U.S. residents increased to $15.9 billion from $15.6 billion.

Secondary income (current transfers)

      The deficit on secondary income increased to $123.8 billion in 2014 from $123.5 billion
in 2013.

      Secondary income receipts increased to $127.1 billion from $118.4 billion; the increase
was more than accounted for by an increase in U.S. government transfers, primarily fines and
penalties (ITA Table 5.1).

      Secondary income payments increased to $250.9 billion from $241.9 billion; the increase
was more than accounted for by an increase in private transfers, primarily insurance-related
transfers and withholding taxes (ITA Table 5.1).

                                       Capital Account

      The capital-account deficit was $0.04 billion in 2014, down from $0.4 billion in 2013.

                                      Financial Account

      Net U.S. borrowing measured by financial-account transactions was $141.6 billion in 2014,
down from $370.7 billion in 2013. Net U.S. acquisition of financial assets excluding financial
derivatives increased in 2014, and net U.S. incurrence of liabilities excluding financial
derivatives decreased. A shift to a negative value in net transactions in financial
derivatives other than reserves partly offset the other two changes.

Net U.S. acquisition of financial assets excluding financial derivatives

      Net U.S. acquisition of financial assets excluding financial derivatives was $820.5
billion in 2014, up from $644.8 billion in 2013.

      Direct investment assets (equity and debt instruments)  Net acquisition of direct
investment assets was $353.2 billion in 2014, down from $408.2 billion in 2013. The decrease
was more than accounted for by a shift to net sales of debt instrument assets (ITA Table 6.1).

      Portfolio investment assets (equity and investment fund shares and debt securities)  Net
U.S. acquisition of portfolio investment assets abroad was $547.4 billion in 2014, up from
$489.9 billion in 2013. Net U.S. purchases of foreign equity and investment fund shares
increased to $437.1 billion from $275.2 billion.  In contrast, net U.S. purchases of foreign
debt securities decreased to $110.3 billion from $214.6 billion, reflecting lower net
purchases of commercial paper and corporate bonds and notes (ITA Table 7.1).

      Other investment assets (currency and deposits, loans, insurance technical reserves, and
trade credit and advances) Net U.S. sales of other investment assets abroad were $76.5 billion
in 2014, down from net sales of $250.3 billion in 2013. The decrease was more than accounted
for by a shift to net acquisition of loans (ITA Table 8.1).

      Reserve assets  Transactions in U.S. reserve assets decreased holdings by $3.6 billion in
2014, after decreasing holdings by $3.1 billion in 2013.  The decreases in both years were
more than accounted for by decreases in the U.S. reserve position in the International
Monetary Fund.

Net U.S. incurrence of liabilities excluding financial derivatives

      Net U.S. incurrence of liabilities to foreigners excluding financial derivatives was
$908.6 billion in 2014, down from $1,017.7 billion in 2013.

      Direct investment liabilities (equity and debt instruments)  Net incurrence of direct
investment liabilities to foreigners was $93.1 billion in 2014, down from $295.0 billion in
2013. The decrease was largely accounted for by a reduction in net incurrence of liabilities
in equity other than reinvestment of earnings.  A reduction in net incurrence of debt
instrument liabilities also contributed to the decrease (ITA Table 6.1).

      Portfolio investment liabilities (equity and investment fund shares and debt securities)
Net U.S. incurrence of portfolio investment liabilities to foreigners was $692.5 billion in
2014, up from $490.9 billion in 2013. Net foreign purchases of U.S. equity and investment fund
shares were $169.9 billion, a shift from net foreign sales of $85.4 billion in 2013. Net
foreign purchases of U.S. debt securities were $522.7 billion, down from $576.4 billion (ITA
Table 7.1).

      Other investment liabilities (currency and deposits, loans, insurance technical reserves,
trade credit and advances, and special drawing rights allocations)  Net U.S. incurrence of
other investment liabilities to foreigners was $123.0 billion in 2014, down from $231.8
billion in 2013. The decrease reflected a shift to net withdrawals of foreign-resident
deposits (ITA Table 8.1).

Financial derivatives other than reserves

      Net transactions in financial derivatives other than reserves were –$53.5 billion in
2014, representing net borrowing. This was a shift from net lending of $2.2 billion in 2013.
Transactions in financial derivatives are only available as a net value equal to transactions
for assets less transactions for liabilities. A positive value represents net cash payments by
U.S. residents to foreign residents from settlements of derivatives contracts (net lending)
and a negative value represents net U.S. cash receipts (net borrowing).

                                   Statistical discrepancy

      The statistical discrepancy was $269.0 billion in 2014 compared with $30.0 billion in
2013.

                                   *          *          *

      In 2014, the U.S. dollar appreciated 3.3 percent on a trade-weighted yearly average basis
against a group of 7 major currencies. In 2013, the U.S. dollar appreciated 3.3 percent on the
same basis. From yearend 2013 to yearend 2014, the dollar appreciated 11.7 percent against the
major currencies. Exchange rate data are based on Federal Reserve Statistical Release H.10.

                                           Revisions

      Statistics for the first three quarters of 2014 were revised to reflect revised seasonal
adjustments and, for the third quarter, newly available and revised source data. For the third
quarter, the current-account deficit is revised downward to $98.9 billion from $100.3 billion.
The goods deficit is revised downward to $181.1 billion from $182.1 billion. The services
surplus is revised downward to $57.2 billion from $57.7 billion. The primary income surplus is
revised upward to $59.8 billion from $59.0 billion. The secondary income deficit is revised
downward to $34.8 billion from $34.9 billion. Third-quarter net borrowing from
financial-account transactions is revised downward to $22.0 billion from $22.5 billion. Net
U.S. acquisition of financial assets excluding financial derivatives is revised downward to
$353.0 billion from $358.2 billion, and net U.S. incurrence of liabilities excluding financial
derivatives is revised downward to $350.7 billion from $356.4 billion.

                                   *          *          *

Release dates in 2015:

      Fourth Quarter and Year 2014....................................March 19, 2015 (Thursday)
      First Quarter 2015 and Annual Revisions..........................June 18, 2015 (Thursday)
      Second Quarter 2015.........................................September 17, 2015 (Thursday)
      Third Quarter 2015...........................................December 17, 2015 (Thursday)

                                   *          *          *

      BEA’s national, international, regional, and industry statistics; the SURVEY OF CURRENT
BUSINESS; and BEA news releases are available without charge on BEA’s Web site at www.bea.gov.
At the site, you can also subscribe to receive free e-mail summaries of BEA releases and
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NOTE: This news release is available on BEA's Web site  along with Highlights related to this release, 
the latest detailed statistics for U.S. international transactions, and a description of the estimation methods 
used to compile them. The fourth-quarter statistics in this release are preliminary and will be revised on 
June 18, 2015. All links in the text of this release—including archived versions of this release—refer to the latest
available statistics.