Archive for February, 2013

GDP Growth Slows in Fourth Quarter

Real gross domestic product (GDP) increased 0.1 percent in the fourth quarter of 2012 after increasing 3.1 percent in the third quarter, according to estimates released by the Bureau of Economic Analysis. The fourth-quarter growth rate was revised up 0.2 percentage point from the advance estimate released in January. Real GDP increased 2.2 percent in 2012 after increasing 1.8 percent in 2011.

gdp1_022813Fourth-quarter highlights
The following contributed to the deceleration in real GDP growth:
• Inventory investment turned down, largely resulting from downturns in inventory investment in manufacturing industries and wholesale trade.
• Federal government spending on defense declined after rising in the third quarter.
• Exports turned down, mainly reflecting downturns in nonautomotive capital goods as well as foods, feeds, and beverages.

In contrast, imports decreased more than in the third quarter. Business investment turned up, primarily reflecting an upturn in equipment and software. Consumer spending also picked up slightly, mainly on financial services and insurance as well as autos and parts.

Fourth-quarter revisions
Net exports was revised up, reflecting an upward revision to exports and a downward revision to imports. Nonresidential fixed investment was also revised up, primarily due to an upward revision to structures. Inventory investment was revised down, as were state and local government spending and consumer spending.

gdp2_0228132012 highlights
Real GDP increased 2.2 percent in 2012 after increasing 1.8 percent in 2011. The pickup in growth in 2012 mainly reflected:
• A deceleration in imports, mainly in nonautomotive capital goods and in petroleum and related products.
• An upturn in residential housing.
• An upturn in inventory investment.
• A smaller decrease in state and local government spending.
The contributions were partly offset by slowdowns in consumer spending, mainly on services, and in exports.

For more, here’s the full report.

Growth Continues Across the Nation’s Metropolitan Areas

Metropolitan areas accounted for nearly 90 percent of national current-dollar gross domestic product (GDP). The ten largest metropolitan areas accounted for 38 percent of national GDP in 2011, while the smallest 79 metropolitan areas accounted for 2 percent of national GDP.metro_area_0213

  • Real GDP grew in 242 of the 366 MSAs. Professional and business services, durable-goods manufacturing, and trade led growth in 2011. Professional and business services contributed more than 50 percent to real GDP growth in 57 metropolitan areas. Growth in this sector was strongest for metropolitan areas in the New England and Far West regions, such as Worcester, MA, and San Francisco-Oakland-Fremont, CA.
  • Many metropolitan areas in the Great Lakes region experienced strong growth in durable-goods manufacturing in 2011. Growth in this sector contributed more than 6 percentage points to growth in Kokomo, IN, and Columbus, IN.
  • Trade contributed 1 percentage point or more to overall growth in real GDP in Odessa, TX, Logan, UT-ID, WA, and Midland, TX.
  • In 2011, San Jose-Sunnyvale-Santa Clara, CA, was the fastest growing metropolitan area (7.7 percent) among economies with real GDP of more than $100 billion. Midland, TX, grew the fastest (9.5 percent) of the metro areas with real GDP of $10–100 billion. Odessa, TX, grew the fastest (15.2 percent) of the metro areas with real GDP of less than $10 billion.

For more information on GDP by metropolitan area, read the full report.

Tracking Global Investment: Who Owns What—and Where

How much does the United States own abroad? And how does that stack up against what foreign investors own in this country? Tracking the ownership and value of trillions of dollars’ worth of financial assets like stocks, bonds, loans, and cash in bank accounts to come up with answers to these very questions is the work of skilled financial sleuths at the U.S. Bureau of Economic Analysis (BEA).021213

We hear a lot about the globalization of commerce and that global interconnectedness is seen vividly on the investment front. BEA’s work helps businesses and government policymakers monitor investors’ appetites for risk and gauge the attractiveness of the United States as a place to invest.

U.S. investors have a strong appetite for the higher returns of foreign stocks versus lower yielding bonds. U.S. investors’ holdings of foreign stocks totaled $4.2 trillion at the end of 2011. In addition, U.S. companies’ and individuals’ ownership stakes in foreign businesses totaled $4.7 trillion. A third large category is money in bank and brokerage accounts valued at $4.3 trillion in bank and brokerage accounts. When other assets are counted, the United States owned a grand total of $21.13 trillion abroad.

Foreign investors, on the other hand, prefer U.S. Treasuries, considered a safe investment. Foreigners’ investments in U.S. Treasuries totaled $5.1 trillion at the end of 2011. (That’s combining the holdings of private investors, foreign central banks, and other government entities.) Foreign companies and individuals, meanwhile, had ownership stakes in U.S. companies valued at $2.9 trillion. Foreigners had $4 trillion worth of assets in U.S. bank and brokerage accounts. Altogether, foreign-owned assets in the United States totaled $25.16 trillion.

Looking across countries, the largest net creditor nations to the United States are China and Japan.

The difference between the total amount of assets Americans own abroad and the total amount of assets foreigners own in the United States is called the net U.S. international investment position.

At the end of 2011, the U.S. net international investment position was $4.03 trillion in the negative. (The United States owned assets in other countries worth $21.13 trillion, while the value of assets foreigners owned in the United States came to $25.16 trillion.) To put that negative $4.03 trillion figure in perspective, it is equal to 5.8 percent of the $69 trillion net worth of U.S. households, businesses, and governments.

In 2010, the net U.S. international investment position was a negative $2.47 trillion, compared with a negative $4.03 trillion in 2011. What happened?

More than half of the negative $1.6 trillion change in the net investment position (from 2010 to 2011) was due to an increase in the prices of foreign holdings of U.S. Treasuries and a decline in the prices of U.S. holdings of foreign stocks. Much of the rest of the increase was in the form of more purchases of U.S. Treasury securities and direct investments by foreign companies. Sometimes, the international investment position is described as the U.S. international debt position, but as the sources of the increase in 2011 suggest, it is in great part reflecting the attractiveness of the United States as a destination for foreign investment.

BEA produces annual reports on the net international investment position, but in just a few months, it will begin providing more timely information on this topic. On March 26, it will begin issuing quarterly reports on the net U.S. international investment position, starting with the fourth quarter of 2012. The new quarterly report (read more here) will offer a more up-to-date picture of the value of U.S. investments abroad compared to the value of foreign investments in the United States.

The investment position accounts complement the international transactions accounts (read more here and here). When used in combination, the two sets of accounts provide a complete statistical picture of the international sector of the U.S. economy.

You can find the latest annual international investment position release here or read more detailed information here.