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Feb 1, 2019

BEA I U.S. Net International Investment Position: Third Quarter 2018 | U.S. Bureau of Economic Analysis (BEA)

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The U.S. net international investment position decreased to −$9,627.2 billion (preliminary) at the end of the third quarter of 2018 from −$8,845.1 billion (revised) at the end of the second quarter, according to statistics released by the Bureau of Economic Analysis (BEA). The $782.1 billion decrease reflected a $135.5 billion increase in U.S. assets and a $917.6 billion increase in U.S. liabilities (table 1).
U.S. Net International Investment Position
The $782.1 billion decrease in the net investment position also reflected net financial transactions of −$24.6 billion and net other changes in position, such as price and exchange-rate changes, of −$757.5 billion (table A).
The net investment position decreased 8.8 percent in the third quarter, compared with a decrease of 14.2 percent in the second quarter and an average quarterly decrease of 4.4 percent from the first quarter of 2011 through the first quarter of 2018.
U.S. assets increased $135.5 billion to $27,150.7 billion at the end of the third quarter, reflecting increases in portfolio investment assets and direct investment assets that were partly offset by decreases in financial derivatives, other investment assets, and reserve assets.
  • Assets excluding financial derivatives increased $214.7 billion to $25,651.5 billion. The increase resulted from financial transactions of $141.9 billion and other changes in position of $72.8 billion (table A).
    • Financial transactions mostly reflected net U.S. acquisition of direct investment assets and net U.S. purchases of foreign securities. The net U.S. acquisition of direct investment assets followed two quarters of net U.S. withdrawal of assets. For more information, see the box "Effects of the 2017 Tax Cuts and Jobs Act on U.S. Direct Investment Assets.
    • Other changes in position reflected foreign stock price increases that raised the equity value of portfolio investment and direct investment assets. These price increases were partly offset by decreases from exchange-rate changes, as several major foreign currencies depreciated against the U.S. dollar, lowering the value of foreign-currency-denominated assets in dollar terms.
  • Financial derivatives decreased $79.3 billion to $1,499.2 billion, reflecting decreases in single-currency interest rate contracts and foreign exchange contracts.
Table A. Quarterly Change in the U.S. Net International Investment Position Billions of dollars, not seasonally adjusted
  Position,
2018:II
Change in position in 2018:III Position,
2018:III
Total Attributable to:
Financial
transactions
Other changes
in position 1
U.S. net international investment position -8,845.1 -782.1 -24.6 -757.5 -9,627.2
   Net position excluding financial derivatives -8,907.7 -776.7 -12.4 -764.3 -9,684.4
   Financial derivatives other than reserves, net 62.6 -5.4 -12.3 6.9 57.2
   U.S. assets 27,015.2 135.5 (2) (2) 27,150.7
      Assets excluding financial derivatives 25,436.7 214.7 141.9 72.8 25,651.5
      Financial derivatives other than reserves 1,578.5 -79.3 (2) (2) 1,499.2
   U.S. liabilities 35,860.3 917.6 (2) (2) 36,777.9
      Liabilities excluding financial derivatives 34,344.4 991.4 154.3 837.1 35,335.9
      Financial derivatives other than reserves 1,515.9 -73.9 (2) (2) 1,442.0
1. Disaggregation of other changes in position into price changes, exchange-rate changes, and other changes in volume and valuation is only presented for annual statistics released in June each year.
2. Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.
U.S. liabilities increased $917.6 billion to $36,777.9 billion at the end of the third quarter, reflecting increases in all major categories of liabilities, except financial derivatives.
  • Liabilities excluding financial derivatives increased $991.4 billion to $35,335.9 billion. The increase resulted from financial transactions of $154.3 billion and other changes in position of $837.1 billion (table A).
    • Financial transactions mostly reflected net U.S. incurrence of direct investment liabilities.  
    • Other changes in position were driven by U.S. stock price increases that raised the equity value of direct investment and portfolio investment liabilities.    
  • Financial derivatives decreased $73.9 billion to $1,442.0 billion, reflecting decreases in single-currency interest rate contracts and foreign exchange contracts.
U.S. Net International Investment Position at the End of the Quarter

Effects of the 2017 Tax Cuts and Jobs Act on U.S. Direct Investment Assets


The earnings of foreign affiliates of U.S. multinational enterprises consist of repatriated earnings to the parent company in the United States in the form of dividends and reinvested earnings in foreign affiliates. When dividends exceed earnings in a given period, reinvested earnings (calculated as a residual) are negative, indicating a net withdrawal of direct investment equity assets. The net withdrawal in the first half of 2018 reflected the repatriation of accumulated prior earnings by foreign affiliates to their U.S. parent companies (as dividends) in response to the 2017 Tax Cuts and Jobs Act (TCJA), which generally eliminates taxes on repatriated earnings. Preliminary statistics for the third quarter show lower dividends and positive reinvested earnings, indicating a net acquisition of direct investment equity assets for the quarter.
The financial transactions highlighted in this release and related income transactions are reflected in the U.S. international transactions accounts. For more information about how the TCJA affected direct investment asset and income transactions, see "U.S. International Transactions: Third Quarter 2018," which was released on December 19, 2018, and two BEA FAQs "How are the international transactions accounts affected by an increase in direct investment dividend receipts?" and "How does the 2017 Tax Cuts and Jobs Act affect BEA's business income statistics?"
Updates to Second-Quarter 2018 International Investment Position Aggregates
Billions of dollars, not seasonally adjusted
  Preliminary estimate Revised estimate
U.S. net international investment position -8,638.5 -8,845.1
   U.S. assets 27,063.6 27,015.2
      Direct investment at market value 8,441.5 8,380.0
      Portfolio investment 12,382.1 12,390.2
      Financial derivatives other than reserves 1,578.5 1,578.5
      Other investment 4,220.6 4,225.6
      Reserve assets 440.9 440.9
   U.S. liabilities 35,702.1 35,860.3
      Direct investment at market value 9,018.5 9,011.8
      Portfolio investment 19,480.7 19,483.0
      Financial derivatives other than reserves 1,515.9 1,515.9
      Other investment 5,687.0 5,849.7
Next release: March 27, 2019, at 8:30 A.M. EDT
U.S. Net International Investment Position, Fourth Quarter and Year 2018
*          *          *
U.S. Net International Investment Position Release Dates in 2019
Fourth Quarter and Year 2018 March 27
First Quarter 2019, Year 2018, and Annual Update June 26
Second Quarter 2019 September 30
Third Quarter 2019 December 27

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