The international investment position of the United States at the end of the fourth quarter and year 2012.

Nguyen, Elena L.

Fourth quarter

The net international investment position of the United States at the end of the fourth quarter of 2012 was -$4,416.2 billion (preliminary), compared with -$4,663.4 billion at the end of the third quarter (chart 1, table 1). (1) The $247.2 billion change in the net position reflected a $207.2 billion decrease in the value of foreign-owned assets in the United States and a $40.0 billion increase in the value of U.S.-owned assets abroad.

U.S.-owned assets abroad. U.S.-owned assets abroad were $20,760.1 billion at the end of the fourth quarter, compared with $20,720.2 billion at the end of the third quarter (chart 2). The $40.0 billion increase reflected an increase of $318.6 billion in the value of U.S.-owned assets excluding financial derivatives that was mostly offset by a decrease of $278.7 billion in the value of financial derivatives.

U.S.-owned assets abroad excluding financial derivatives were $17,140.3 billion at the end of the fourth quarter, compared with $16,821.7 billion at the end of the third quarter. The $318.6 billion increase reflected $120.5 billion in financial outflows and $198.1 billion in valuation changes. (2)

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Foreign-owned assets in the United States. Foreign-owned assets in the United States were $25,176.3 billion at the end of the fourth quarter, compared with $25,383.6 billion at the end of the third quarter. The $207.2 billion decrease reflected a decrease of $284.6 billion in the value of financial derivatives that was partly offset by an increase of $77.3 billion in the value of foreign-owned assets in the United States excluding financial derivatives.

Foreign-owned assets in the United States excluding financial derivatives were $21,614.4 billion at the end of the fourth quarter, compared with $21,537.0 billion at the end of the third quarter. The $77.3 billion increase reflected $176.0 billion in financial inflows and -$98.6 billion in valuation changes.

[GRAPHIC OMITTED]

Year 2012

The net international investment position of the United States was -$4,416.2 billion (preliminary) at the end of 2012, compared with -$4,030.3 billion at the end of 2011. The -$386.0 billion change reflected a $372.3 billion decrease in the value of U.S.-owned assets abroad and a $13.7 billion increase in the value of foreign-owned assets in the United States.

U.S.-owned assets abroad. U.S.-owned assets abroad were $20,760.1 billion at the end of 2012, compared with $21,132.4 billion at the end of 2011. The $372.3 billion decrease reflected a decrease of $1,084.9 billion in the value of financial derivatives that was mostly offset by an increase of $712.6 billion in the value of U.S.-owned assets abroad excluding financial derivatives.

U.S.-owned assets abroad excluding financial derivatives were $17,140.3 billion at the end of 2012 compared with $16,427.7 billion at the end of 2011. The $712.6 billion increase reflected $730.6 billion in valuation changes as prices of foreign stocks increased in 2012 after falling in 2011. The valuation changes were partly offset by financial inflows of $17.9 billion.

Foreign-owned assets in the United States. Foreign-owned assets in the United States were $25,176.3 billion at the end of 2012, compared with $25,162.6 billion at the end of 2011. The $13.7 billion increase reflected an increase of $1,030.2 billion in the value of foreign-owned assets in the United States excluding financial derivatives that was mostly offset by a decrease of $1,016.4 billion in the value of financial derivatives.

Foreign-owned assets in the United States excluding financial derivatives were $21,614.4 billion at the end of 2012, compared with $20,584.2 billion at the end of 2011. The $1,030.2 billion increase reflected $384.9 billion in financial inflows and $645.3 billion in valuation changes as prices of U.S. corporate stocks and bonds increased in 2012.

Additional annual statistics for 2012, including changes in positions resulting from financial flows and detailed valuation changes, along with historical revisions will be presented in the next International Investment Position of the United States news release on June 25, 2013.

New Quarterly Statistics on the International Investment Position of the United States

In this report, the Bureau of Economic Analysis presents the new quarterly statistics on the international investment position of the United States. The new statistics are available for the fourth quarter of 2005 through the fourth quarter of 2012. Previously published yearend positions have not been revised. These new statistics are part of BEA's effort to provide more frequent and more timely statistics on cross-border linkages to help users better assess U.S. vulnerability to external financial shocks in the aftermath of the 2008 financial crisis.

The international investment position is a statistical balance sheet that shows the dollar value of U.S. external financial assets and liabilities at a specific point in time. The net investment position is defined as the value of U.S.-owned assets abroad less the value of foreign-owned assets in the United States. The net investment position relative to the size of the U.S. economy is a measure of U.S. financial condition and creditworthiness. The net investment position plus total U.S. nonfinancial wealth is equal to the U.S. national net worth.

The new quarterly statistics present the same account components as the annual statistics released in June 2012. These statistics are fully consistent with BEA's widely followed international transactions accounts. In addition, positions for U.S. direct investment abroad and foreign direct investment in the United States valued at historical cost are now available as memorandum to the annual and quarterly statistics.

The quarterly statistics will be released in March, June, September, and December via BEA news releases. In June, these statistics will be part of a broader release that also includes revised annual statistics, changes in positions resulting from financial flows and detailed valuation changes, and historical revisions. In July, BEA will continue to publish an article in the SURVEY OF CURRENT BUSINESS that focuses mainly on the annual statistics.

Valuing the Components of the U.S. International Investment Position

Investment positions for long-term portfolio securities are based on market values from annual surveys conducted by the Treasury International Capital (TIC) reporting system of the U.S. Department of the Treasury. Investment positions for financial derivatives are based on fair market values from quarterly surveys conducted by the TIC reporting system. Investment positions for claims and liabilities reported by banks, securities brokers, and other nonbanks are based on contractual (face) values of instruments as reported by financial institutions for their own accounts or for the accounts of their customers on the monthly and quarterly surveys conducted by the TIC reporting system with supplementary data for U.S. nonbanks from foreign central banks.

Investment positions for direct investment are valued at current-period prices based on a revaluation of book values. Book values are reported by U.S. multinational companies on surveys conducted by the Bureau of Economic Analysis (BEA). Direct investment at current cost is BEA's featured measure of direct investment at current-period prices. (1) The current-cost method values the U.S. and foreign parents' shares of their affiliates' investment in (1) plant and equipment using the current cost of capital equipment, (2) land using general price indexes, and (3) inventories using estimates of their replacement cost. (2)

(1.) BEA publishes direct investment at market value as an alternative current-period price measure. This measure values owners' equity based on stock market price indexes. BEA also publishes direct investment at historical cost, with owners' equity measured at the book value reported on BEA's surveys. Country and industry detail for direct investment are available only on a historical-cost basis. These statistics are available on BEA's Web site at www.bea.gov.

(2.) For additional information on the current-cost and market-value methods, see J. Steven Landefeld and Ann M. Lawson, "Valuation of the U.S. Net International Investment Position," SURVEY OF CURRENT BUSINESS 71 (May 1991): 40-49.

(1.) For comprehensive international investment position statistics, including annual statistics beginning with 1976 and quarterly statistics beginning with the fourth quarter of 2005, see "International Investment Position, 1976-2012" at www.bea.gov.

(2.) For statistics on financial flows, see the financial account transactions in table 1 of the "U.S. International Transactions" article in this issue. Detailed valuation changes by type of change for the year 2012 will be presented in the next International Investment Position of the United States news release on June 25, 2013.

Table 1. International Investment Position of the United States
at the End of the Quarter (1)
[Millions of dollars, not seasonally adjusted]

                                                 2011

Line            Type of investment                IV

 1     Net international investment
           position of the United States
           (lines 2 + 3)                        4,030,250
 2       Financial derivatives, net (line
           5 less line 25)                        126,252
 3       Net international investment
           position, excluding financial
           derivatives (line 6 less line
           26)                                 -4,156,502

 4       U.S. owned assets abroad
             (lines 5 + 6)                     21,132,370
 5         Financial derivatives (gross
             positive fair value)               4,704,666
 6         U.S.-owned assets abroad,
             excluding financial
             derivatives (lines 7 + 12 +
             17)                               16,427,704
 7         U.S. official reserve assets           536,036
 8           Gold (2)                             400,355
 9           Special drawing rights                54,956
10           Reserve position in the
               International Monetary Fund         30,080
11           Foreign currencies                    50,645
12         U.S. government assets, other
               than official reserve
               assets                             178,901
13           U.S. credits and other
                 long-term assets (3)              78,373
14             Repayable in dollars                78,100
15             Other (4)                              273
16           U.S. foreign currency
               holdings and U.S.
               short-term assets (5)              100,528
17         U.S. private assets                 15,712,767
18           Direct investment at current
               cost                             4,681,569
19           Foreign securities                 5,922,001
20             Bonds                            1,763,754
21             Corporate stocks                 4,158,247
22           U.S. claims on unaffiliated
               foreigners reported by U.S.
               nonbanking concerns                796,827
23           U.S. claims reported by U.S.
               banks and securities
               brokers, not included
               elsewhere                        4,312,370

24       Foreign-owned assets in the
             United States (lines 25 + 26)     25,162,620
25         Financial derivatives (gross
             negative fair value)               4,578,414
26         Foreign-owned assets in the
             United States, excluding
             financial derivatives (lines
             27 + 34)                          20,584,206
27         Foreign official assets in the
               United States                    5,250,792
28           U.S. government securities         4,277,348
29             U.S. Treasury securities         3,653,065
30             Other                              624,283
31           Other U.S. government
               liabilities (6)                    119,359
32           U.S. liabilities reported by
               U.S. banks and securities
               brokers, not included
               elsewhere                          209,550
33           Other foreign official assets        644,535
34         Other foreign assets                15,333,414
35           Direct investment at current
               cost                             2,908,791
36           U.S. Treasury securities           1,418,050
37           U.S. securities other than
                 U.S. Treasury securities       5,968,177
38             Corporate and other bands        2,909,962
39             Corporate stocks                 3,058,215
40           U.S. currency                        397,086
41           U.S. liabilities to
               unaffiliated foreigners
               reported by U.S. nonbanking
               concerns                           629,728
42           U.S. liabilities reported by
               U.S. banks and securities
               brokers, not included
               elsewhere                        4,011,582

       Memoranda:
43     Direct investment abroad at market
         value                                  4,499,962
44     Direct investment in the United
         States at market value                 3,509,359
45     Direct investment abroad at
         historical cost                        4,155,551
46     Direct investment in the United
         States at historical cost              2,547,828

                                                        2012

Line            Type of investment                 I           II

 1     Net international investment
           position of the United States
           (lines 2 + 3)                      -4,162,992   -4,680,073
 2       Financial derivatives, net (line
           5 less line 25)                        77,084       69,043
 3       Net international investment
           position, excluding financial
           derivatives (line 6 less line
           26)                                 4,240,076   -4,749,116

 4       U.S. owned assets abroad
             (lines 5 + 6)                    20,785,561   20,318,147
 5         Financial derivatives (gross
             positive fair value)              3,942,897    4,140,513
 6         U.S.-owned assets abroad,
             excluding financial
             derivatives (lines 7 + 12 +
             17)                              16,842,664   16,177,634
 7         U.S. official reserve assets          572,578      556,620
 8           Gold (2)                            434,742      418,006
 9           Special drawing rights               55,460       54,341
10           Reserve position in the
               International Monetary Fund        31,436       33,930
11           Foreign currencies                   50,940       50,343
12         U.S. government assets, other
               than official reserve
               assets                            127,824      111,174
13           U.S. credits and other
                 long-term assets (3)             80,652       82,510
14             Repayable in dollars               80,379       82,237
15             Other (4)                             273          273
16           U.S. foreign currency
               holdings and U.S.
               short-term assets (5)              47,172       28,664
17         U.S. private assets                16,142,262   15,509,840
18           Direct investment at current
               cost                            4,801,217    4,825,981
19           Foreign securities                6,424,890    6,054,854
20             Bonds                           1,775,337    1,747,955
21             Corporate stocks                4,649,553    4,306,899
22           U.S. claims on unaffiliated
               foreigners reported by U.S.
               nonbanking concerns               849,967      839,634
23           U.S. claims reported by U.S.
               banks and securities
               brokers, not included
               elsewhere                       4,066,188    3,789,371

24       Foreign-owned assets in the
             United States (lines 25 + 26)    24,948,553   24,998,220
25         Financial derivatives (gross
             negative fair value)              3,865,813    4,071,470
26         Foreign-owned assets in the
             United States, excluding
             financial derivatives (lines
             27 + 34)                         21,082,740   20,926,750
27         Foreign official assets in the
               United States                   5,344,094    5,446,794
28           U.S. government securities        4,319,166    4,430,658
29             U.S. Treasury securities        3,696,626    3,820,663
30             Other                             622,540      609,995
31           Other U.S. government
               liabilities (6)                   122,680      124,227
32           U.S. liabilities reported by
               U.S. banks and securities
               brokers, not included
               elsewhere                         190,424      196,424
33           Other foreign official assets       711,824      695,485
34         Other foreign assets               15,738,646   15,479,956
35           Direct investment at current
               cost                            2,932,170    2,992,683
36           U.S. Treasury securities          1,434,919    1,476,428
37           U.S. securities other than
                 U.S. Treasury securities      6,378,928    6,224,331
38             Corporate and other bands       2,934,845    2,902,018
39             Corporate stocks                3,444,083    3,322,313
40           U.S. currency                       415,143      422,259
41           U.S. liabilities to
               unaffiliated foreigners
               reported by U.S. nonbanking
               concerns                          682,005      678,136
42           U.S. liabilities reported by
               U.S. banks and securities
               brokers, not included
               elsewhere                       3,895,481    3,686,119

       Memoranda:
43     Direct investment abroad at market
         value                                 4,960,890    4,639,071
44     Direct investment in the United
         States at market value                3,846,691    3,762,669
45     Direct investment abroad at
         historical cost                       4,275,199    4,299,963
46     Direct investment in the United
         States at historical cost             2,571,206    2,631,720

                                                        2012

Line            Type of investment                III        IV (p)

 1     Net international investment
           position of the United States
           (lines 2 + 3)                      -4,663,404    4,416,243
 2       Financial derivatives, net (line
           5 less line 25)                        51,892       57,776
 3       Net international investment
           position, excluding financial
           derivatives (line 6 less line
           26)                                 4,715,296    4,474,019

 4       U.S. owned assets abroad
             (lines 5 + 6)                    20,720,154   20,760,106
 5         Financial derivatives (gross
             positive fair value)              3,898,433    3,619,761
 6         U.S.-owned assets abroad,
             excluding financial
             derivatives (lines 7 + 12 +
             17)                              16,821,721   17,140,345
 7         U.S. official reserve assets          606,277      570,648
 8           Gold (2)                            464,422      431,714
 9           Special drawing rights               55,232       55,050
10           Reserve position in the
               International Monetary Fund        35,248       34,161
11           Foreign currencies                   51,375       49,723
12         U.S. government assets, other
               than official reserve
               assets                             95,970       93,790
13           U.S. credits and other
                 long-term assets (3)             82,703       84,248
14             Repayable in dollars               82,430       83,975
15             Other (4)                             273          273
16           U.S. foreign currency
               holdings and U.S.
               short-term assets (5)              13,267        9,542
17         U.S. private assets                16,119,474   16,475,907
18           Direct investment at current
               cost                            4,897,840    4,944,427
19           Foreign securities                6,432,218    6,763,173
20             Bonds                           1,802,335    1,843,629
21             Corporate stocks                4,629,883    4,919,544
22           U.S. claims on unaffiliated
               foreigners reported by U.S.
               nonbanking concerns               846,395      870,149
23           U.S. claims reported by U.S.
               banks and securities
               brokers, not included
               elsewhere                       3,943,021    3,898,158

24       Foreign-owned assets in the
             United States (lines 25 + 26)    25,383,558   25,176,349
25         Financial derivatives (gross
             negative fair value)              3,846,541    3,561,985
26         Foreign-owned assets in the
             United States, excluding
             financial derivatives (lines
             27 + 34)                         21,537,017   21,614,364
27         Foreign official assets in the
               United States                   5,615,555    5,681,262
28           U.S. government securities        4,546,139    4,600,858
29             U.S. Treasury securities        3,925,250    3,985,849
30             Other                             620,889      615,009
31           Other U.S. government
               liabilities (6)                   126,771      127,326
32           U.S. liabilities reported by
               U.S. banks and securities
               brokers, not included
               elsewhere                         203,871      214,479
33           Other foreign official assets       738,774      738,599
34         Other foreign assets               15,921,462   15,933,102
35           Direct investment at current
               cost                            3,037,527    3,070,383
36           U.S. Treasury securities          1,523,526    1,540,207
37           U.S. securities other than
                 U.S. Treasury securities      6,541,385    6,580,029
38             Corporate and other bands       2,990,435    3,022,400
39             Corporate stocks                3,550,950    3,557,629
40           U.S. currency                       438,415      454,227
41           U.S. liabilities to
               unaffiliated foreigners
               reported by U.S. nonbanking
               concerns                          678,101      662,054
42           U.S. liabilities reported by
               U.S. banks and securities
               brokers, not included
               elsewhere                       3,702,508    3,626,202

       Memoranda:
43     Direct investment abroad at market
         value                                 5,025,637    5,191,116
44     Direct investment in the United
         States at market value                3,953,586    3,931,976
45     Direct investment abroad at
         historical cost                       4,371,822    4,418,409
46     Direct investment in the United
         States at historical cost             2,676,564    2,709,419

                                                Change:      Change:
                                              2012:III to  2011:IV to
Line            Type of investment              2012:IV      2012:IV

 1     Net international investment
           position of the United States
           (lines 2 + 3)                         247,161     -385,993
 2       Financial derivatives, net (line
           5 less line 25)                         5,884      -68,476
 3       Net international investment
           position, excluding financial
           derivatives (line 6 less line
           26)                                   241,277     -317,517

 4       U.S. owned assets abroad
             (lines 5 + 6)                        39,952     -372,264
 5         Financial derivatives (gross
             positive fair value)               -278,672   -1,084,905
 6         U.S.-owned assets abroad,
             excluding financial
             derivatives (lines 7 + 12 +
             17)                                 318,624      712,641
 7         U.S. official reserve assets          -35,629       34,612
 8           Gold (2)                            -32,708       31,359
 9           Special drawing rights                 -182           94
10           Reserve position in the
               International Monetary Fund        -1,087        4,081
11           Foreign currencies                   -1,652         -922
12         U.S. government assets, other
               than official reserve
               assets                             -2,180      -85,111
13           U.S. credits and other
                 long-term assets (3)              1,545        5,875
14             Repayable in dollars                1,545        5,875
15             Other (4)                               0            0
16           U.S. foreign currency
               holdings and U.S.
               short-term assets (5)              -3,725      -90,986
17         U.S. private assets                   356,433      763,140
18           Direct investment at current
               cost                               46,587      262,858
19           Foreign securities                  330,955      841,172
20             Bonds                              41,294       79,875
21             Corporate stocks                  289,661      761,297
22           U.S. claims on unaffiliated
               foreigners reported by U.S.
               nonbanking concerns                23,754       73,322
23           U.S. claims reported by U.S.
               banks and securities
               brokers, not included
               elsewhere                          44,863      414,212

24       Foreign-owned assets in the
             United States (lines 25 + 26)      -207,209       13,729
25         Financial derivatives (gross
             negative fair value)               -284,556   -1,016,429
26         Foreign-owned assets in the
             United States, excluding
             financial derivatives (lines
             27 + 34)                             77,347    1,030,158
27         Foreign official assets in the
               United States                      65,707      430,470
28           U.S. government securities           54,719      323,510
29             U.S. Treasury securities           60,599      332,784
30             Other                              -5,880       -9,274
31           Other U.S. government
               liabilities (6)                       555        7,967
32           U.S. liabilities reported by
               U.S. banks and securities
               brokers, not included
               elsewhere                          10,608        4,929
33           Other foreign official assets          -175       94,064
34         Other foreign assets                   11,640      599,688
35           Direct investment at current
               cost                               32,856      161,592
36           U.S. Treasury securities             16,681      122,157
37           U.S. securities other than
                 U.S. Treasury securities         38,644      611,852
38             Corporate and other bands          31,965      112,438
39             Corporate stocks                    6,679      499,414
40           U.S. currency                        15,812       57,141
41           U.S. liabilities to
               unaffiliated foreigners
               reported by U.S. nonbanking
               concerns                          -16,047       32,326
42           U.S. liabilities reported by
               U.S. banks and securities
               brokers, not included
               elsewhere                         -76,306     -385,380

       Memoranda:
43     Direct investment abroad at market
         value                                   165,479      691,154
44     Direct investment in the United
         States at market value                  -21,610      422,617
45     Direct investment abroad at
         historical cost                          46,587      262,858
46     Direct investment in the United
         States at historical cost                32,855      161,591

(p) Preliminary

(1.) The statistics for each quarter are the values as of the last
day of the quarter: the first quarter ends on March 31; the second
quarter ends on June 30; the third quarter ends on September 30; and
the fourth quarter ends on December 31 of the year.

(2.) U.S. official gold stock is valued at market price.

(3.) 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.

(4.) 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.

(5.) Includes foreign-currency-denominated assets obtained through
temporary reciprocal currency arrangements between the Federal
Reserve System and foreign central banks. These assets are included
in the investment position at the dollar value established at the
time they were received, reflecting the valuation of these assets in
the Federal Reserve System's balance sheet. Changes in exchange rates
do not affect this valuation.

(6.) Includes U.S. government liabilities associated with military
sales contracts and U.S. government reserve-related liabilities from
allocations of special drawing rights (SDRs). Source: Bureau of
Economic Analysis