Archive for June, 2012

Value of Foreign Investment in the U.S. Increased More than Value of U.S. Investment Abroad in 2011

The U.S. net international investment position at yearend 2011 was –$4,030.3 billion (preliminary), as the value of foreign investment in the United States exceeded the value of U.S. investment abroad. At yearend 2010, the U.S. net international investment position was –$2,473.6 billion (revised).

Increases in the prices of U.S. Treasury bonds and declines in foreign stock prices raised the value of foreign investment in the United States and lowered the value of U.S. investment abroad.

The impact of changes in U.S. and foreign asset prices of –$802.1 billion accounted for over half of the –$1.6 trillion change in the U.S. net international investment position.

Most of the rest of the change in the U.S. net international investment position reflected foreign acquisitions of U.S. assets (including over $400 billion in U.S. Treasury securities) that exceeded U.S. acquisitions of foreign assets. U.S. acquisitions of foreign assets were reduced by an unusual decline in U.S. claims on foreigners as reported by U.S. banks and securities brokers.

The appreciation of the U.S. dollar against a trade-weighted index of major currencies caused a change of –$23.0 billion in the U.S. net international investment position.

The U.S. net international investment position was equal to 2.6 percent of the value of all U.S. financial assets at the end of 2011, up from 1.6 percent in 2010 and up from the recent peak of 2.3 percent in 2008.

To learn more about the U.S. international investment position read the full report.

New Global Guidelines Offer ‘How To’ for More Consistent and Reliable Data

Globalization, the financial crisis, the Great Recession, and Europe’s fiscal problems underscore just how important it is for countries to produce timely, accurate, and consistent data. Information on real gross domestic product, inflation, balance sheets, and international trade are essential to assessing cross-country effects and coordinating effective monetary, fiscal, regulatory, and trade policies. That’s why it is so valuable to have these key pieces of data put together in a more consistent manner, making it easier to compare what’s going on in one country to another, or within a given country across industries, or over time.

Wall Street traders and corporate executives—many of whom do business around the globe—rely on transparent and consistent data to make investing, hiring, and other decisions. In recent years, though, as uncertainty and the stakes on getting it right have increased, discrepancies among different economic indicators have become more of a problem to private—and public—decisionmakers. And that’s driven home the critical need for consistency between short-term indicators as well as macroeconomic measures on the state of a country’s economy. This information is especially valuable when a country may be on the verge of a turning point—such as sliding into recession or launching into a recovery.

The United Nation’s new Guidelines on Integrated Economic Statistics is a comprehensive “soup-to-nuts” handbook on making economic statistics not only more consistent but more efficient. The guidelines cover a range of topics including basic standards and methods, questionnaire design, consistent business registers and sample frames, standard classification systems, uses of survey and administrative data, and effective dissemination and communication strategies. Readers also are directed to case studies, more detailed international manuals, and guidelines in each of these areas.

For a link to the U.N. Guidelines, which is the product of an international working group chaired by BEA Director Steve Landefeld, go to

New Study Provides Profile of U.S. Firms that Export and Import Services

Chart of trading partnersData from the Bureau of Economic Analysis (BEA) show that the United States has historically maintained a trade surplus in private services.  So what types of firms are involved in this kind of trade abroad?  Thanks to a new BEA study we have a better understanding of the kinds of American companies that export and import services.

Here are some of the key findings:

• Firms in industries typically associated with the production or sales of manufactured goods are significant services traders, accounting for more than 25 percent of exports and imports covered by the study.  Trade in services by manufacturers largely consists of transactions related to the use or creation of intellectual property, the provision of headquarters’ management and support services, or the allocation of expenses.

• Multinational companies, especially U.S. parent companies, are important services traders, accounting for more than 80 percent of trade in services with both affiliated (their own foreign branches) and unaffiliated parties.  U.S. parents tend to have larger transactions, trade with more countries, and trade more service types as compared to U.S. affiliates of foreign parents and non-multinationals.Chart of services types traded

• Business, professional, and technical services, especially research and development, testing services, and management and consulting services, accounted for more than one third of trade by both U.S. parents and U.S. affiliates.

• Many small firms engage in services trade, but large firms dominate the value of trade.

• The trade in services of multinational companies is dominated by transactions with their affiliated parties.  This is especially true for business, professional, and technical services, and royalties and license fees.  Financial services trade, such as brokerage and advisory and management services, is primarily with unaffiliated parties.  Those findings are based on a new data set that combines data from surveys on cross-border trade in services with data on the operations of multinational companies.

In 2008, trade in services included in the study—financial services; insurance; royalties and license fees; telecommunications; and business, professional, and technical services (excluding medical services)—totaled $302.3 billion in exports and $195.6 billion in imports, resulting in a surplus on trade of $106.7 billion.  These services accounted for more than half of total private services exports and imports, and nearly three-quarters of the $148.3 billion U.S. surplus on private services trade in 2008. To learn more about the characteristics of U.S. exporters and importers of services, read the full article.