2009-annual revision of the us international accounts

Annual Revision of the U.S. International Accounts

By Anne Flatness, Erin M. Whitaker, and Robert E. Yuskavage

I

N JUNE, the Bureau of Economic Analysis (BEA) released annual revisions of the U.S international

transactions accounts (ITAs) and the U.S. interna­

tional investment position. Through annual revisions, BEA introduces new and improved definitions and classifications, newly available and more complete source data, improved estimation procedures, and new

and updated presentations that improve the reliability and consistency of the statistics and address important new developments in the U.S. and international econ­omies.

For this annual revision, the most important change

is a new treatment of certain disaster-related losses re­covered from international insurers. Under this new treatment, BEA will record certain disaster-related in­surance losses recovered in the capital account rather

than as a component of unilateral transfers in the cur­

rent account. This treatment is consistent with new in­ternational standards and with the new treatment of disaster-related losses that will be introduced in the

forthcoming comprehensive revision of the national

income and product accounts. The new treatment af­

fects statistics for 1992, 2001, 2004, 2005, and 2008. Other significant changes introduced in this annual

revision include the following:

● Exports and imports of goods on a balance-of-pay­ ments basis were revised for 2001–2008. Revisions to exports reflect revised Census Bureau source data for civilian aircraft and improved procedures for excluding goods that are included in transfers under U.S. military agency sales contracts. Revisions to imports incorporate new source data that improve the coverage of locomotives and railcars.

● Services receipts and payments were revised for 2006–2008 to incorporate updated and revised data from BEA’s quarterly and benchmark surveys of international services transactions. In addition, transfers under U.S. military agency sales contracts were revised to more completely account for train­ ing services and equipment provided to local secu­rity forces in Iraq and Afghanistan.

●

Direct investment financial flows and related income receipts and payments were revised for 2006–2008 to incorporate new quarterly and annual data from BEA’s surveys of U.S. direct investment abroad and foreign direct investment in the United States.

● Foreign securities financial flows as well as interest receipts for foreign bonds and dividend receipts for foreign stocks were revised for 2006–2008 to incor­ porate the results of the U.S. Treasury Department’s annual survey of U.S. Ownership of Foreign Securi­ties for December 2007 and revised source data. ● U.S. securities financial flows as well as interest pay­ments for U.S. bonds and dividend payments for U.S. stocks were revised for 2006–2008 to incorpo­ rate the results of the U.S. Treasury Department’s annual survey of Foreign-Residents’ Holdings ofU.S. Securities for June 2008 and revised source data.

Acknowledgments

The revised statistics for the U.S. international accounts were prepared under the general direction of

Paul W. Farello and Christopher A. Gohrband.

Mai-Chi Hoang, Marc A. Bouchard, Benjamin󰀞

Kavanaugh, and R. Christian Thieme prepared revised󰀞

balance-of-payments adjustments for merchandise󰀞 trade under the direction of John Rutter. Mai-Chi󰀞 Hoang prepared the updated presentation of Table 2󰀞 for U.S. Trade in Goods.󰀞

Patricia Mosley prepared revised statistics for trans­fers under U.S. military agency sales contracts and for󰀞 U.S. government grants, and Anne Flatness prepared󰀞 statistics for the new treatment of disaster-related󰀞

insurance transactions, both under the direction of󰀞 Paul W. Farello.󰀞

Elena L. Nguyen, Erin M. Whitaker, and Cavan󰀞

Wilk prepared revised financial account statistics󰀞

related to holdings of U.S. and foreign securities under󰀞 the direction of Christopher A. Gohrband.󰀞

36 U.S. International Accounts July 2009

The presentation of the adjustment of “Census­

basis” merchandise trade data to a balance-of-pay­

ments basis was revised. These adjustments are

shown in table 2 in the quarterly ITA article in this

issue (see page 72).

Statistics for U.S. international transactions were re­vised for 1992 and for 2001–2008. The revisions for

1992 were entirely due to the new treatment of certain

disaster-related insurance settlements. Revised statis­tics for the detailed components of the U.S. interna­tional transactions accounts for 1992 and 2001–2008

●

“The Statistical Discrepancy in Periods of Economic

Turbulence.” The U.S. net international investment position was revised slightly for both 2006 and 2007,

but the revisions did not significantly affect the net as­

set position of the United States relative to the rest of the world.

This article is divided into two major sections. The first section summarizes the impact of the revisions on

the statistics from the current, capital, and financial ac­

counts, including the statistical discrepancy, and the

international investment position. The second section

are shown in table 1 in the quarterly ITA article (see

page 66). Summary information on revisions for

2001–2008 is shown in table E in this article.

Despite several relatively large changes, this annual revision has not significantly altered the overall picture of U.S. international transactions or the U.S. interna­tional investment position for the past several years. The revised statistics for the current account show

nearly the same widening of the current-account defi­

cit through 2006, a larger decline in the deficit for

2007, and a smaller decline for 2008 (chart 1). The re­

vised statistics for the financial account continue to show large reductions in net financial inflows during the financial crisis even with significant downward re­

visions for 2007 and 2008 (chart 2). The upward revi­

sion to the statistical discrepancy for 2008—resulting from opposing revisions to the current account and fi­nancial account—highlights the importance of BEA’s continuing efforts to improve its coverage of interna­tional transactions. For more information, see the box

Chart 1. Current-Account Deficit, 2001–2008 Billion $ 900 Previously published Revised 800 700 600 500 400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 U.S. Bureau of Economic Analysis discusses the major changes in definitions, methodolo­

gies, source data, and presentation introduced in this

annual revision.

Revisions

The revisions to the statistics resulted from updated

source data and the incorporation of new source data,

a new definition, and improved methodologies. The majority of the revisions resulted from updated source data. These changes affect all categories of the interna­tional transactions accounts. Revisions to the financial

account were larger than those to the current and capi­

tal accounts. The annual revision is also the first time

that complete statistics on financial derivatives for the

preceding year are available, providing the first com­plete picture of 2008 transactions.

Annual highlights, current account

Current-account and capital-account statistics were re­vised for 1992 and 2001–2008. The current-account

Chart 2. Net Financial Inflows, 2001–2008 Billion $ 900 Previously published Revised 800 700 600 500 400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 U.S. Bureau of Economic Analysis July 2009 SURVEY OF CURRENT BUSINESS 37

deficit was revised up for 1992, 2001, 2004–2006, and

2008, and it was revised down for 2002, 2003, and 2007. The revised statistics show the same trend in the

current-account deficit as the previously published sta­

tistics. The deficit declined slightly in 2001, rose con­tinuously through 2006, and then declined again in 2007 and 2008 (table A). In the revised statistics, how­ever, the increase in the deficit for 2005 and the de­crease for 2007 are steeper, and the deficit for 2007 is

lower than the deficit for 2005. The steeper increase in 2005 is primarily due to an increase in net outflows of net unilateral current transfers resulting from the new treatment of disaster-related losses recovered. The

steeper decrease in 2007 is primarily due to a larger in­

crease in the surplus on income.

The decrease in the current-account deficit for 2008 is now noticeably smaller, primarily due to a smaller increase in the surplus on income. The surplus on in­

come increased $27.4 billion in the revised statistics,

compared with $45.8 billion in the previously pub­lished statistics. A larger increase in the deficit on

goods and a smaller increase in the surplus on services

also contributed.

Goods and services. The deficit on goods and ser­

vices was revised up for 2001 and 2004–2008 and re­vised down for 2002 and 2003. The largest revision was for 2008. For that year, the combined deficit on goods and services was revised up $14.8 billion. This reflects the combined effects of an upward revision to the defi­cit on goods of $19.4 billion and an upward revision to the surplus on services of $4.6 billion. Exports of goods and services were revised down $9.2 billion; a down­

ward revision of $14.4 billion to goods was partly off­ set by an upward revision of $5.2 billion to services.

Imports of goods and services were revised up $5.6 bil­

lion; $5.0 billion was due to goods, and $0.6 billion was

due to services.

Goods were revised for 2001–2008; the largest revi­

sions were for 2006–2008 (table B). The deficit on

goods was revised up for 2001 and for 2004–2008, with

amounts ranging from $0.4 billion in 2001 to $19.4

billion in 2008. These revisions largely resulted from significant downward revisions to goods exports re­lated to revised source data for civilian aircraft. The

deficit on goods was revised down slightly for both

2002 and 2003, largely the result of upward revisions to goods exports for those years related to the new meth­odology for identifying and excluding goods that are recorded as transfers under U.S. military sales con­

tracts (a component of trade in services). Small up­ ward revisions to goods imports for 2001–2007 were mostly related to the new source data for locomotives and railcars. The revisions for 2001–2007 did not sig­nificantly change the trends of exports, imports, and the deficit on goods. For 2008, the increase in the defi­

cit on goods is now more pronounced, rising $9.3 bil­

lion, compared with $1.5 billion in the previously published statistics. It contributed to the smaller de­cline in the current-account deficit noted above.

Services were revised for 2006–2008. The services

Table A. Revisions to Current-Account Balances and to Net Financial Flows, 2001–2008

[Billions of dollars]

(Credits +; debits –) 1

Balance on current account (line 77): Revised ...................................................................................................................... Amount of revision ................................................................................................. Previously published .................................................................................................. Balance on goods (line 72): Revised ...................................................................................................................... Amount of revision ................................................................................................. Previously published ..................................................................................................

2001 –398.3 –13.6 –384.7 –429.9 –0.4 –429.5

2002 –459.2 2.1 –461.3 –482.8 2.1 –485.0

2003 –521.5 1.9 –523.4 –549.0 1.9 –550.9

2004 –631.1 –6.1 –625.0 –671.8 –2.3 –669.6

2005 –748.7 –19.7 –729 –790.9 –3.7 –787.1

2006 –803.5 –15.4 –788.1 –847.3 –9.0 –838.3 86.9 1.9 85.0 –760.4 –7.1 –753.3 48.1 –9.1 57.2–91.3 0.8 –92.0 809.2 –29.9 839.1

2007 –726.6 4.6 –731.2 –831.0 –11.6 –819.4 129.6 10.5 119.1 –701.4 –1.2 –700.3 90.8 9.1 81.7–116.0 –3.3 –112.7 663.6 –110.8 774.3

2008 –706.1 –32.8 –673.3 –840.3 –19.4 –820.8 144.3 4.6 139.7 –695.9 –14.8 –681.1 118.2 –9.3 127.6 –128.4 –8.7 –119.7 505.1 –41.5 546.6

Balance on services (line 73):

Revised ...................................................................................................................... 64.4 61.2 54.0 61.8 75.6 Amount of revision ................................................................................................. ..................... ..................... ...................... ..................... ..................... Previously published .................................................................................................. 64.4 61.2 54.0 61.8 75.6 Balance on goods and services (line 74): Revised ...................................................................................................................... Amount of revision ................................................................................................. Previously published ..................................................................................................

–365.5 –0.4 –365.1

–421.6 2.1 –423.7

–495.0 1.9 –496.9

–610.0 –2.3 –607.7

–715.3 –3.7 –711.6

Balance on income (line 75):

Revised ...................................................................................................................... 31.7 27.4 45.3 67.2 72.4

Amount of revision ................................................................................................. ..................... ..................... ...................... ..................... .....................

Previously published .................................................................................................. 31.7 27.4 45.3 67.2 72.4Unilateral current transfers, net (line 76):

Revised ......................................................................................................................

Amount of revision .................................................................................................

Previously published ..................................................................................................

–64.5 –64.9 –71.8 –13.2 ..................... ...................... –51.3 –64.9 –71.8

–88.4

–3.9 –84.5

–105.8 –16.0 –89.8

Net financial flows (lines 40, 55, and 70):

Revised ...................................................................................................................... 400.3 500.5 532.9 532.3 700.7

Amount of revision ................................................................................................. ..................... ..................... ...................... ..................... .....................

Previously published .................................................................................................. 400.3 500.5 532.9 532.3 700.7 1. Credits +; An increase in U.S. receipts and U.S. liabilities, or a decrease in U.S. payments and U.S. claims. Debits –; An increase in U.S. payments and U.S. claims, or a decrease in U.S. receipts and U.S. liabilities. NOTE. Line numbers refer to table 1 in “U.S. International Transactions: First Quarter of 2009” in the July 2009 S URVEY OF CURRENT BUSINESS.

38 U.S. International Accounts July 2009

surplus was revised up $1.9 billion for 2006, $10.5 2007, and was revised down $9.3 billion for 2008. Sig­billion for 2007, and $4.6 billion for 2008, largely re­nificant revisions to direct investment payments, re­

sulting from upward revisions to exports. Within ex­sulting from updated source data from BEA surveys,

ports, transfers under U.S. military agency sales were the largest source of revision. Upward revisions to contracts were revised up significantly in all years to other private income receipts for 2007 and 2008 mostly

more completely account for training and equipment resulted from higher estimates of income earned on

provided to local security forces in Iraq and Afghani­foreign securities.

stan.1 Exports recorded under royalties and license fees Transfers. Net outflows of unilateral current trans­were also revised up for 2007 and 2008. A downward fers were revised up for 1992, 2001, 2004–2005, and revision to “other private services”—largely resulting 2007–2008. Net outflows of transfers for 2006 were re­

from downward revisions to business, professional, vised down slightly. The largest revisions were for years

and technical services—was partly offsetting. The revi­affected by the new treatment of disaster-related insur­sions to royalties and license fees and “other private ance settlements (1992, 2001, 2004, 2005, and 2008). services” resulted from updated source data from BEA These revisions affected private remittances and other

surveys. Revisions to imports of services were generally transfers. Downward revisions to U.S. government

small. The exception is 2007, for which there were sig­grants also contributed. nificant downward revisions to “other private ser­

vices,” particularly business, professional, and Annual highlights, capital account technical services. Upward revisions to the capital account for 1992, 2001,

Income. The surplus on income was revised down 2004, and 2005 were entirely due to the new treatment

$9.1 billion for 2006, was revised up $9.1 billion for of disaster-related insurance settlements. These revi­

sions offset the revisions to private remittances and

1. This revision is separate from the revision to goods covered under U.S. other transfers. The large upward revision for 2008 was military sales contracts described in the previous paragraph. also partly due to this new treatment. Downward,

Table B. Revisions to Selected Current-Account and Capital-Account Transactions, 2001–2008

[Billions of dollars] (Credits +; debits –) 1

2001

2002

2003

2004

2005

2006 2,133.9

–8.3 2,142.2 1,015.8 –7.3 1,023.1 435.9 2.0 433.9 682.2 –2.9 685.2 –2,846.2

–7.9 –2,838.3 –1,863.1

–1.7 –1,861.4 –349.0 –0.1 –348.9 –634.1 –6.2 –628.0 –91.3 0.8 –92.0 –3.9 * –3.9

2007 2,462.1 –1.4 2,463.5 1,138.4 –10.1 1,148.5 504.8 7.5 497.2 818.9 1.2 817.8 –3,072.7

9.3 –3,082.0 –1,969.4

–1.5 –1,967.9 –375.2 2.9 –378.1 –728.1 7.9 –736.0 –116.0 –3.3 –112.7 –1.9 –0.1 –1.8

2008 2,591.2

* 2,591.3 1,277.0 –14.4 1,291.4 549.6 5.2 544.4 764.6 9.2 755.5 –3,168.9 –24.1 –3,144.8 –2,117.2

–5.0 –2,112.2 –405.3 –0.6 –404.7 –646.4 –18.5 –627.9 –128.4 –8.7 –119.7 1.0 3.6 –2.6

Exports of goods and services and income receipts (line 1): Revised ...................................................................................................................... 1,295.7 1,258.4 1,340.6 1,573.0 1,816.7 Amount of revision ................................................................................................. * 2.7 2.4 –1.4 –2.3 Previously published .................................................................................................. 1,295.7 1,255.7 1,338.2 1,574.3 1,819.0 Goods, balance of payments basis (line 3): Revised .................................................................................................................. 718.7 685.2 715.8 806.2 892.3 Amount of revision * 2.7 2.4 –1.4 –2.3 Previously published .............................................................................................. 718.7 682.4 713.4 807.5 894.6 Services (line 4):

Revised .................................................................................................................. 286.2 292.3 304.3 353.1 389.1 Amount of revision ............................................................................................. ..................... ...................... ..................... ..................... ...................... Previously published .............................................................................................. 286.2 292.3 304.3 353.1 389.1 Income receipts (line 12):

Revised .................................................................................................................. 290.8 280.9 320.5 413.7 535.3 Amount of revision ............................................................................................. ..................... ...................... ..................... ..................... ...................... Previously published .............................................................................................. 290.8 280.9 320.5 413.7 535.3 Imports of goods and services and income payments (line 18): Revised ...................................................................................................................... –1,629.5 –1,652.6 –1,790.4 –2,115.7 –2,459.6

Amount of revision ................................................................................................. –0.4 –0.6 –0.6 –0.9 –1.4

Previously published .................................................................................................. –1,629.1 –1,652.0 –1,789.8 –2,114.8 –2,458.2

Goods, balance of payments basis (line 20):

Revised .................................................................................................................. –1,148.6 –1,168.0 –1,264.9 –1,478.0 –1,683.2

Amount of revision ............................................................................................. –0.4 –0.6 –0.6 –0.9 –1.4

Previously published .............................................................................................. –1,148.2 –1,167.4 –1,264.3 –1,477.1 –1,681.8 Services (line 21):

Revised .................................................................................................................. –221.8 –231.1 –250.4 –291.2 –313.5 Amount of revision ............................................................................................. ..................... ...................... ..................... ..................... ...................... Previously published .............................................................................................. –221.8 –231.1 –250.4 –291.2 –313.5 Income payments (line 29):

Revised .................................................................................................................. –259.1 –253.5 –275.1 –346.5 –462.9 Amount of revision ............................................................................................. ..................... ...................... ..................... ..................... ...................... Previously published .............................................................................................. –259.1 –253.5 –275.1 –346.5 –462.9 Unilateral current transfers, net (line 35):

Revised ...................................................................................................................... Amount of revision ................................................................................................. Previously published .................................................................................................. Capital account transactions, net (line 39):

Revised ...................................................................................................................... Amount of revision ................................................................................................. Previously published ..................................................................................................

–64.5 –64.9 –71.8 –13.2 ...................... ..................... –51.3 –64.9 –71.8 11.9 –1.5 –3.5 13.2 ...................... ..................... –1.3 –1.5 –3.5

–88.4

–3.9 –84.5 1.3 3.7 –2.4

–105.8 –16.0 –89.8 11.3 15.4 –4.0

* Less than 500,000 (+/–)

1. Credits +; An increase in U.S. receipts and U.S. liabilities, or a decrease in U.S. payments and U.S. claims. Debits –; An increase in U.S. payments and U.S. claims, or a decrease in U.S. receipts and U.S. liabilities. NOTE. Line numbers refer to table 1 in “U.S. International Transactions: First Quarter of 2009” in the July 2009

SURVEY OF CURRENT BUSINESS.

July 2009 SURVEY OF CURRENT BUSINESS 39

revisions to the capital account for 2006 and 2007 were primarily due to updated source data on the number Securities for December 2007. For 2008, net sales of foreign securities were revised down $30.2 billion. and wealth of migrants, which are used in the estima­tion of migrants’ transfers.

Annual highlights, financial account

Revisions to the financial account were made for 2006– 2008. Despite significant downward revisions to net fi­nancial inflows for each year, the revisions did not alter the picture of large declines in net financial inflows for 2007 and 2008 after a peak in 2006 (table A). Net fi­nancial inflows, including financial derivatives, were revised down $29.9 billion for 2006, $110.8 billion for 2007, and $41.5 billion for 2008. For 2006 and 2007, excluding financial derivatives, both U.S.-owned assets abroad and foreign-owned assets in the United States were revised up in absolute value. For 2008, both ma­jor categories of transactions were revised down. Net

financial derivatives were unrevised for 2006 and were

revised down only slightly for 2007.

2

For the most part, these revisions reflect the incorporation of new source data from the Treasury International Capital reporting system.

U.S.-owned assets abroad. U.S.-owned assets abroad excluding financial derivatives represent the net

acquisition of foreign assets by U.S. residents. These

transactions, in which net acquisitions are recorded as

outflows with a minus sign, were revised up (became

more negative) $34.0 billion for 2006 and $182.3 bil­ lion for 2007 (table C). As a result, U.S. net acquisi­

tions increased modestly in 2007 to a historically high

level. In the previously published statistics, U.S. net ac­quisitions showed a slight increase. U.S.-owned assets abroad were revised down $52.4 billion for 2008. The combination of these revisions resulted in an even more precipitous decline for 2008 than had been shown in the previously published statistics; U.S. net

acquisitions for 2008 were revised to less than $1 bil­

lion, a historically low level.

Components affected by the revisions include the

following:

● U.S. direct investment abroadsions for 2007 reflected updated annual and quar­. Strong upward revi­terly data from BEAForeign secu’s direct investment surveys. ● foreign securities of $77.8 billion were the largest rities. For 2007, upward revisions to contributor to the overall revision to U.S.-owned assets abroad. Revisions for 2007 largely reflected the incorporation of the U.S. Treasury Depart­ment’s annual survey of U.S. Ownership of Foreign 2. Net financial derivatives were –$28.9 billion in 2008. Previously, pub­lished statistics are not available, because data were not available for the fourth quarter of 2008.

● Nonbank claims. For 2006, upward revisions reflected updated annual and quarterly data from BEA’s direct investment surveys. For 2007 and 2008, updated reporting related to the settlement of dis­tressed debt strongly contributed to the overall revi­sion for nonbank claims. For 2007, overall upward revisions to claims by nonbanks were $39.8 billion, and for 2008, overall downward revisions to claims

by nonbanks were $88.5 billion.

Table C. Revisions to Selected Financial- 󰀯

Account Transactions, 2006–2008󰀯

[Billions of dollars]

(Credits +; debits –) 1

2006

2007

2008

U.S. owned assets abroad, excluding financial derivatives

(line 40):

Revised...................................................................................... –0.1 Previously published .................................................................. Amount of revision ................................................................. –1,285.7 –1,251.7 –34.0 –1,472.1 –1,289.9 –182.3 –52.5

52.4 U.S. private assets abroad Direct investment (line 51): Revised.................................................................................. –244.9 –398.6 –332.0 Previously published Amount of revision ............................................................. .............................................................. –241.2 –3.7 –333.3 –65.3 –317.8 –14.2 Foreign securities (line 52): Revised.................................................................................. –365.1 –366.5 Previously published Amount of revision ............................................................. .............................................................. –365.2 0.1 –288.7 –77.8 –30.2 60.8 91.0 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns (line 53):

Revised.................................................................................. –181.3 –40.5 372.2 Previously published Amount of revision ............................................................. .............................................................. –164.6 –16.7 –39.8 –0.7 283.8 88.5 U.S. claims reported by U.S. banks (line 54):

Revised.................................................................................. –502.1 –644.1 433.4 Previously published Amount of revision ............................................................. .............................................................. –488.4

–13.7 –644.8

0.7 425.0

8.4 Foreign-owned assets in the United States, excluding financial derivatives (line 55):

Revised...................................................................................... 2,065.2

2,129.5 Previously published ..................................................................

Amount of revision ................................................................. 2,061.1 4.1 71.8 534.1 2,057.7 –65.0 599.0

Foreign official assets in the United States U.S. Treasury securities (line 58): Revised.................................................................................. 208.6 98.4 Previously published.............................................................. Amount of revision ............................................................. ................ 208.6 39.6 477.7 58.9 442.2 35.4 Other foreign official assets (line 62): Revised.................................................................................. 96.7 Previously published Amount of revision ............................................................. .............................................................. ................ 34.4 34.4 30.0 88.3 66.7

30.0 58.3

Other foreign assets in the United States Direct investment (line 64): Revised.................................................................................. 243.2 275.8 319.7 Previously published Amount of revision ............................................................. .............................................................. 242.0 1.2 237.5 38.2 325.3 –5.5 U.S. Treasury securities (line 65): Revised.................................................................................. –58.2

Previously published Amount of revision ............................................................. .............................................................. –58.2 * –90.0 66.8 156.8 –111.0 196.6 307.6 U.S. securities other than U.S. Treasury securities (line 66): Revised.................................................................................. 683.2 605.7 –126.7 Previously published Amount of revision ............................................................. .............................................................. 683.4 –0.1 573.9 31.8 –123.6 –3.2 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns (line 68):

Revised.................................................................................. 244.8 201.7 –45.2 Previously published Amount of revision ............................................................. .............................................................. 242.7 2.1 156.3 45.4 –15.8 –29.3 U.S. liabilities reported by U.S. banks, not included elsewhere (line 69):

Revised.................................................................................. 462.0 509.3 –326.6 Previously published Amount of revision ............................................................. ..............................................................

461.1

0.9 –23.5 532.8

–337.3

10.8 * Less than 500,000 (+/–) 1. Credits +; An increase in U.S. receipts and U.S. liabilities, or a decrease in U.S. payments and U.S. claims. Debits –; An increase in U.S. payments and U.S. claims, or a decrease in U.S. receipts and U.S. liabilities. NOTE. Line numbers refer to table 1 in “U.S. International Transactions: First Quarter of 2009” in the July 2009 SURVEY OF CURRENT BUSINESS.

40 U.S. International Accounts July 2009

Bank claims. For 2006, upward revisions reflected updated annual and quarterly data from BEA’s direct investment surveys. 3

Foreign-owned assets in the United States. For­

eign-owned assets in the United States excluding fi­

nancial derivatives represent the net acquisition of U.S. assets by foreign residents. These transactions, in which net acquisitions are recorded as inflows with a

positive sign, were revised up $4.1 billion for 2006 and

$71.8 billion for 2007. As a result, foreign net acquisi­

tions of U.S. assets increased modestly from 2006 to a

●

Quarterly highlights, current account

In general, the revisions to the quarterly statistics for exports, imports, income and transfers did not signifi­

cantly affect the previously published patterns of quar­ter-to-quarter changes in the current-account deficit (chart 3). However, some quarterly patterns were re­vised because of the new treatment of certain disaster-related insurance losses recovered. The effects of this new treatment are concentrated in the specific quarters when the disasters occurred. As a result, the balance on

the current account, net unilateral current transfers,

historically high level in 2007. In contrast, the previ­ously published statistics showed a slight decline. For 2008, foreign-owned assets in the United States were revised down $65.0 billion, accelerating an already steep decline from 2007 levels.

Many of the larger revisions to the detailed compo­

nents for each year were offsetting. Components af­fected by the revisions include the following:

● Official and private holdings of U.S. Treasusecurities. Official holdings of U.S. Treasury securi­ ry

ties were revised up significantly for 2007 and 2008,

while private holdings were revised down even

more significantly. The revisions were largely due to updated data from the U.S. Treasury Department’s

annual survey of Foreign-Residents’ Holdings of

U.S. Securities for June 2008.

● Foreign direct investment in the United States. Strong upward revisions of $38.2 billion for 2007 were largely due to updated annual and quarterly data from BEA’s direct investment surveys.

● Other foreign official assets and private holdings of U.S. securities other than Treasury securities.Other foreign official assets were revised up $30.0

billion for 2007 and 2008. For 2007, holdings of U.S. securities other than Treasury securities were revised up $31.8 billion. The upward revisions were largely due to updated data from the U.S. Treasury

Department’s annual survey of Foreign-Residents’

Holdings of U.S. Securities for June 2008.

● U.S. liabilities to uby U.S. nonbanking concerns.naffiliated foreigners reported Upward revisions

were related to updated data from BEA ’s annual and quarterly direct investment surveys and to revised supplemental transactions from foreign counter-parties. Overall, nonbank liabilities were revised up $45.4 billion for 2007.

3. Survey data on direct investment affects U.S. claims reported by banks because owner’s equity and permanent debt are included in direct invest­

ment statistics; bank claims are adjusted to avoid double-counting. Survey

data on direct investment affects U.S. claims reported by nonbanks because

nonbank claims include financial intermediaries’ intercompany debt accounts for which data are collected in the direct investment surveys.

private remittances and other transfers, and the capital

account were all significantly revised for the third

quarters of 1992, 2001, 2004, 2005, and 2008. For 2001, 2004, and 2005, the seasonally adjusted current-ac­count deficit in the third quarter is now larger than the

deficit in the second quarter.

In addition to the sources of revisions outlined for the annual statistics, the quarterly statistics incorpo­

rate revised seasonal factors for exports and imports of

goods and services and income flows. For most quar­ters, the sum of revisions from all sources did not sig­nificantly affect the direction or magnitude of change of the quarterly seasonally adjusted statistics for major current-account aggregates. The revisions in change were significant for just two quarters, the second quar­ter of 2007 and the fourth quarter of 2008. The decline in the current-account deficit for the second quarter of 2007 is now much larger primarily because of revisions in the surplus on income for the first and second quar­ters of 2007. These revisions resulted from the incor­poration of new survey data on direct investment

Chart 3. Quarterly Current-Account Deficit, 2006–2008 Billion $ 220 Previously published 200 Revised 180 160 140 120 100 80 2006 2007 2008 Seasonally adjusted U.S. Bureau of Economic Analysis

July 2009 SURVEY OF CURRENT BUSINESS 41

vision did not affect the direction of change from the

third quarter to the fourth quarter of 2007, it signifi­

cantly reduced the size of the increase.

The increase in net financial inflows for the second

quarter of 2006 was revised up sharply from $4.6 bil­

lion to $38.2 billion, reflecting the combination of a

Quarterly highlights, financial account downward revision for the first quarter of 2006 and an Revisions to the quarterly statistics for net financial in­upward revision for the second quarter of 2006. The flows, U.S.-owned assets abroad, and foreign-owned downward revision for the first quarter was primarily assets in the United States largely reflected the revi­due to a higher level of U.S. bank and nonbank claims.

sions to the annual statistics and for the most part did The upward revision for the second quarter was pri­

income flows. In addition, the decline in the current-account deficit is now significantly smaller for the fourth quarter of 2008 primarily because of a large

downward revision to the surplus on income and an

upward revision to the deficit on goods.

not significantly affect the published patterns of quar­ter-to-quarter changes (chart 4). Net financial inflows for all quarters in 2006–2008 remained well below the

peak of $292.2 billion in the fourth quarter of 2005. The revised statistics for the fourth quarter of 2008 still show a sharp decline, despite a significant upward revi­ sion, to the lowest level of net financial inflows since the second quarter of 2005. Net financial inflows were revised down for all quarters except for the second quarter of 2006 and the fourth quarter of 2008. Both U.S.-owned assets abroad and foreign-owned assets in the United States were revised up for most quarters of 2006 and 2007 and down for all quarters of 2008. With one exception, directions of change were not affected by the revisions. The exception is the first quarter of 2008, which declined in the previously pub­lished statistics but increased in the revised statistics. The shift resulted from a large downward revision for the fourth quarter of 2007. The downward revision was more than accounted for by a $94.8 billion upward revision to U.S.-owned assets abroad. The latter partly reflects a revision to nonbank claims. Although this re-Chart 4. Quarterly Net Financial Inflows, 2006–2008 Billion $ 280 Previously published 240 Revised 200 160 120 80 40 0 2006 2007 2008 Seasonally adjusted U.S. Bureau of Economic Analysis marily due to a lower level of U.S. direct investment

abroad.

Statistical discrepancy

In principle, net financial inflows should equal the

combined balances on the current account and capital account. In practice, they usually differ, sometimes by

large amounts, because of incomplete source data, gaps in coverage, or other omissions. For certain peri­ods, revisions to net financial inflows plus financial de­rivatives differed significantly from the revisions to the

combined deficits of the current account and capital

account. As a result, revisions to the statistical discrep­

ancy were relatively large for some periods. For 2006,

the revisions moved the statistical discrepancy close to

zero. For 2007 and 2008, however, opposing revisions

resulted in larger statistical discrepancies. BEA contin­

ues to conduct research and work closely with its

source data partners to address concerns about the size

of the statistical discrepancy. See the box “The Statisti­

cal Discrepancy During Periods of Economic Turbu­lence.” International investment position

The international investment position for 2006–2007

was revised. The position with direct investment at

current cost for 2006 was revised

$41.5 billion, to –$2,184.3 billion from –$2,225.8 billion. U.S.-owned

assets abroad were revised to $14,428.1 billion from

$14,381.3 billion, and foreign-owned assets in the United States were revised to $16,612.4 billion from $16,607.1 billion. The position for 2007 was revised

$301.9 billion, to –$2,139.9 billion from –$2,441.8 bil­

lion. U.S.-owned assets abroad were revised to

$18,278.8 billion from $17,640.0 billion, and foreign- owned assets in the United States were revised to $20,418.8 billion from $20,081.8 billion.

4

4. For additional information about the international investment position

see Elena L. Nguyen, “The International Investment Position of the United

States at Yearend 2008” in this issue of the SURVEY OF

CURRENT BUSINESS. 42 U.S. International Accounts July 2009

The Statistical Discrepancy in Periods of Economic Turbulence The U.S. international transaction accounts (ITAs) pro-vide an integrated set of accounts that portray, for a given period, the flows of goods, services, income, and transfers between the United States and other countries. The ITAs consist of the current account, the capital account, and the financial account. The current account depicts flows associated with exports and imports of goods and ser­ vices, cross-border income receipts and payments, and net unilateral current transfers. The capital account mea­sures capital transfers and the acquisition or disposal of nonproduced, nonfinancial assets. The financial account records the net acquisition of U.S. assets abroad, foreign net acquisition of assets in the United States, and finan­cial flows under derivatives contracts. In principle, the deficit (or surplus) on the combined current and capital accounts equals net foreign inflows (or outflows) in the financial account. This relationship follows from the accounting identity that domestic investment equals domestic saving plus net foreign investment. In practice, however, because of data gaps, omissions, and other measurement issues, the accounting identity doesn’t hold exactly; that is, the statistical dis- crepancy never exactly equals zero. When net financial inflows are less than the combined current- and capital-account deficits, the statistical dis­crepancy is positive. When net financial inflows are greater than the combined current- and capital-account deficits, the statistical discrepancy is negative. Viewed in this way, the statistical discrepancy can be interpreted as a component of the net financing of the combined current- and capital-account deficits, and its size can then be eval­ uated relative to the size of the combined deficits. For the past several quarters, the value of the statistical discrepancy has been relatively large and positive, indi­cating a shortfall of measured net financial inflows rela­tive to the combined current- and capital-account deficits. Large positive or negative values for the statisti­cal discrepancy are a cause for concern because these val­ues can signal measurement problems in one or more of the components of the current, capital, or financial accounts. Persistence in the sign of the statistical discrep-ancy (positive or negative) for several quarters is may also signify systematic overstatement or understatement in one or more sets of accounts. In contrast, quarterly changes in the sign of the statistical discrepancy may sim­ply indicate differences in the timing of recording trans­ actions in various components of the accounts. Large statistical discrepancies with persistent signs hamper the interpretation of overall trends and patterns in the accounts. History suggests that the size of the statistical discrep­ ancy may tend to be greatest during periods of unsettled financial market conditions. For 2008, a year marked by financial market turbulence, the statistical discrepancy was $200.5 billion, the largest since 1998 when it was $148.9 billion. Like 2008, 1998 was affected by several unusual financial market developments, including the East Asian financial crisis that started in 1997 and contin­ued into 1998, the Russian financial crisis, and the col-lapse of Long-Term Capital Management, a large hedge fund. In 1998, the statistical discrepancy represented 69 percent of the combined current- and capital-account deficits, whereas in 2008, despite its large absolute size, it represented 28 percent. The statistical discrepancy was also large in relative terms in 1997 and each year in 1988–92, a period that included the recession of 1990–91. In addition to its relatively large size in recent years, the statistical discrepancy has been positive for seven consec­utive quarters starting with the third quarter of 2007 through the first quarter of 2009. A similar pattern wasobserved for 1998–99, when the discrepancy was positivefor seven consecutive quarters from the first quarter of 1998 through the third quarter of 1999.BEA has taken several steps over the last decade toreduce or eliminate gaps and omissions in the ITAs that may have contributed to the statistical discrepancy. Ingeneral, BEA believes that the gaps and omissions in thesource data for the current account are not as great as those for the financial account, especially for claims and liabilities reported by nonbanking concerns.Starting with data for 2006, BEA has included mea­ sures of net flows under financial derivative contracts. Last year, the financial account was improved by includ­ ing measures of missing flows related to the issuance of asset-backed commercial paper by offshore special pur-pose vehicles. For the current account, measures of ser­vices exports and imports were improved last year,starting with 2006, by combining the collection of trans­actions between both affiliated and unaffiliated parties ina single survey instrument and expanding the detail for affiliated transactions. BEA will continue to research andwork closely with its source data partners—including theCensus Bureau, the Treasury Department, and the Fed-eral Reserve Board—to reduce the size and persistence of the statistical discrepancy. Chart A.Chart A. Statistical DiscrepancStatistical Discrepancy as a Py as a Perercent of thecent of the Combined Current-Account and Capital-Account Deficit, Combined Current-Account and Capital-Account Deficit, 1997–2008 1997–2008Percent 80 60 40 20 0 –20 –40 –60 1997 98 99 2000 01 02 03 04 05 06 07 08 U.S. Bureau of Economic Analysis July 2009 SURVEY OF CURRENT BUSINESS 43

This section identifies the changes in definitions and

methodologies introduced in this annual revision, de­

scribes the accounts, components, and periods af­

fected, briefly discusses the rationale for the change, and describes changes in presentation. Changes in def­initions and classifications are discussed first, followed by changes in methodologies and source data. Changes in definitions and classifications represent new or im­proved views of the economic accounting concepts and Changes in Definitions,󰀟

Methodologies, and Presentation󰀟

count. Because the actual losses recovered were not paid out of income arising from current production, the inclusion of transfers associated with these losses in the current account introduced volatility that was not related to income from production in the current

quarter. Economic accounting principles suggest that

activities that are primarily related to the income state­ment should appear in the current account, whereas activities that are primarily related to the balance sheet

should appear in the capital account. In addition, a

large percentage of disaster-related losses recovered are principles that should be measured in the accounts. Changes in methodologies and source data provide better statistical measures of specific concepts or prin­ciples.

Changes in definitions and classifications For this annual revision, the only change in definitions or classifications is a new treatment of certain disaster-related losses recovered from international insurance companies. This change affects private remittances and

other transfers, a component of net unilateral current

transfers in the current account, and the capital ac­count. Periods with revised statistics are those with major disasters. A similar change in treatment will be

introduced in the upcoming comprehensive revision of

the national income and product accounts (NIPAs).

5 BEA defines and measures insurance services as pre­miums minus “normal” losses, where normal losses are inferred from the relationship of actual losses to premiums averaged over several years plus premium supplements (income deemed to be the property of policyholders) and auxiliary insurance services.6 Dif­

ferences between actual and normal losses must be ac­

counted for with offsetting entries. Under the prior treatment, the entire amount of the offsets were en­

tered (on a net basis) as part of unilateral current

transfers, as was recommended by international guide­lines.

This treatment led to conceptual problems in quar­

ters when major natural or man-made disasters re­sulted in large inflows of losses recovered from international insurers. In these quarters, actual losses recovered exceeded normal losses, resulting in sharp increases (inflows) in current unilateral transfers. However, insurance companies pay disaster-related losses out of reserves that are set up for this purpose and investment income, not from their current ac­

5. See Eugene P. Seskin and Shelly Smith, “Preview of the 2009 Compre­hensive Revision of the NIPAs: Changes in Definitions and Presentations” SURVEY 6. For more information on the insurance methodology see Christopher 89 (March 2009): 10–28.

L. Bach, “Annual Revision of the U.S. International Accounts, 1992–2002,” SURVEY 83 (July 2003): 35–37, and Christopher L. Bach, “Annual Revision of the U.S. International Accounts, 1995–2005,” SURVEY 86 (July 2006): 42.

for damage to buildings and other capital assets. Be­cause they arise from the loss of capital and are in­

tended to fund the replacement of capital, it is

inappropriate to include these losses in the current ac­count.

Beginning with this year’s annual revision, BEA will

record certain disaster-related losses recovered in the capital account. This new treatment acknowledges the capital nature of disaster-related losses, and removes the volatility not related to current production. In ad­dition, this treatment corresponds with recently re­

vised international guidelines in the International

Monetary Fund’s

Balance of Payments and Interna­tional Investment Position Manual (6th edition) and the

2008 System of National Accounts . The new treatment does not affect the estimation of insurance services, or the treatment of catastrophic losses in that estimation. This new treatment affects statistics for the third

quarters of 1992, 2001, 2004, 2005, and 2008 (table D).

These revisions remove a large amount of the volatility from current transfers and introduce additional vola­

tility into the capital account.

The revisions presented here are consistent with

those that will be made to “the rest of the world” (in­

ternational) transactions in the upcoming NIPA revi­sion.7 Disaster-related losses recovered from insurance companies, including those from “the rest of the

7. Because many disasters do not have a significant international compo­

nent, the NIPA revisions to domestic transactions include more quarters.

Table D. Impact of New Treatment of Disaster-Related Insurance Losses Recovered, Selected Quarters

[Millions of dollars, Not seasonally adjusted]

(Credits +; debits –) 1

1992:III 2001:III 2004:III 2005:III 2008:III 2

Private remittances and other transfers (line 38):

Revised ................................................................. –5,350 –12,065 –14,902 –15,477 –21,946

Amount of revision ............................................ –1,535 –13,192 –3,691 –15,380 –1,926 Previously published ............................................. –3,815 1,127 –11,211 –97 –20,020 Capital account transactions, net (line 39): Revised ................................................................. 1,404 12,859 2,739 14,913

2,967

Amount of revision ............................................ 1,535 13,192

3,691 15,380

3,702 Previously published .............................................

–131

–333 –952

–467 –735

1. Credits +; An increase in U.S. receipts and U.S. liabilities, or a decrease in U.S. payments and U.S. claims. Debits –; An increase in U.S. payments and U.S. claims, or a decrease in U.S. receipts and U.S. liabilities. 2. Amount of revision includes the effect of updated source data.

NOTE. Line numbers refer to table 1 in “U.S. International Transactions: First Quarter of 2009” in the July 2009 SURVEY OF CURRENT BUSINESS.

44 U.S. International Accounts July 2009

world” insurers, will be moved from the current ac­

count to the capital account.

Changes in methodologies and source data

Current account

Several changes in methodologies and source data were

introduced that improve the statistics on merchandise exports and imports. In addition, source data were up­dated for services, income, and transfers.

A new methodology was introduced for calculating the adjustment to “Census-basis” merchandise trade agency sales contracts were revised up for 2006– 2008.

● The incorporation of updated and revised quarterly

data, collected on BEA surveys, on receipts and pay­

ments of private services for 2006–2008. In last

year’s annual revision, BEA published total trade (affiliated and unaffiliated) for all types of private services for the first time.

● The incorporation of annual survey data on direct investment financial flows and investment income for 2006–2007 and quarterly survey data for 2006– data for exports transferred under U.S. military agency sales contracts (see table 2, part A, line 5, page 72).8 Goods exported under these contracts are included as exports of services in the international transaction ac­counts (see table 1, line 5, page 66) because both goods and services are provided through these contracts and are commingled in the source data. To avoid double-counting, an adjustment is made to remove these

goods from the “Census-basis” data. Under the previ­

ous methodology, Harmonized Tariff System codes

were used to identify and remove all military-type

transactions. The new methodology, introduced start­ing with statistics for 2002, identifies specific goods ex­

ported through U.S. military agency sales contracts

and removes these goods from the “Census-basis” data. The new methodology yielded smaller adjust­ments for 2002–2007 and a larger adjustment for 2008. A new adjustment to “Census-basis” merchandise trade data (see table 2, part A, line 12, page 72) was in­troduced to account for imports of locomotives and

railcars from Mexico and Canada. In the late 1990s, a

change in U.S. trade law eliminated the requirement for U.S. importers of locomotives and railcars to file certain U.S. Customs documents, creating a gap in the reported data. To close this reporting gap, beginning with statistics for 2001, BEA introduced a new adjust­

ment, based on actual trade data reported by U.S. trade

partners.

Other changes include the following:

● The introduction of revised source data for exports of civilian aircraft. Exports of civilian aircraft were revised down for 2004–2008.

● In services, new transactions were included in trans­fers under U.S. military agency sales contracts to more completely account for training services and equipment provided to local security forces in Iraq and Afghanistan. Transfers under U.S. military

8. The “Census-basis” merchandise trade data are compiled by the Census Bureau from the documents collected by the U.S. Customs and Border Pro­tection. BEA adjusts the “Census-basis” data for coverage and valuation to bring them into conformity with balance-of-payments concepts.

2008.

Financial account

The annual revision introduced new and improved source data from the U.S. Treasury Department’s an­ nual survey of U.S. Ownership of Foreign Securities for December 2007 and its annual survey of Foreign-Resi­dents’ Holdings of U.S. Securities for June 2008. The incorporation of data from these surveys led to revised position statistics for many types of holdings for 2007 and had a significant impact on new position statistics for 2008. There were related revisions to income re­ceipts and payments. Most categories of financial

transactions were also revised to account for new sur­

vey results; however, there were no revisions to net

transactions related to foreign official holdings of

agency bonds or to net transactions related to foreign official holdings of corporate bonds. Revisions to net transactions related to private holdings of corporate

bonds were entirely related to revisions to other up­ dated source data. Below is a summary of survey-re­

lated revisions to positions for 2007.

Foreign stocks and bonds. Positions were revised

for 2007 to incorporate the results from the U.S. Trea­

sury Department’s annual survey of U.S. Ownership of

Foreign Securities for December 2007. Positions for foreign stocks were revised up $77.6 billion; there were very small downward revisions related to other up­dated source data. Positions for foreign bonds were re­vised up $103.0 billion; there were additional upward

revisions related to other updated source data.

Treasury bonds. Positions for private and foreign

official holdings were revised for 2007 to incorporate

the results from the U.S. Treasury Department’s annual

survey of Foreign-Residents’ Holdings of U.S. Securi­

ties for June 2008 (June 2008 survey). Foreign official

holdings were revised up $37.3 billion. Private hold­ings were revised down $97.7 billion; there were small upward revisions related to other updated source data.

U.S. agency bonds.

Positions for foreign official and private holdings

were also revised to incorporate July 2009 SURVEY OF CURRENT BUSINESS $56.0 billion.

45

results from the June 2008 survey. Foreign official

holdings were revised down $2.1 billion. Private hold­

ings were revised down $17.6 billion; there were small

upward revisions related to other updated source data.

Corporate bonds and stocks. Positions for foreign official and private foreign holdings were revised to in­corporate results from the June 2008 survey. Private holdings of U.S. corporate bonds were revised down

$6.9 billion; upward revisions related to other updated source data were more than offsetting. Official hold­ ings were revised down $26.6 billion. Private holdings of U.S. stocks were revised up $68.0 billion; there were very small downward revisions related to other up­dated source data. Official holdings were revised up

Changes in presentation

Several modifications have been made to part A of ta­ble 2 (see page 72). Part A presents the adjustments

made to convert exports and imports of goods from a

“Census basis” to the balance-of-payments basis used

for the international transactions accounts. Lines for

adjustments that are no longer needed for the reconcil­

iation were eliminated, and new lines were added to separately identify large adjustments that had been in­cluded under “other adjustments, net.” Small adjust­

ments were moved to the “other adjustments, net” line.

For exports, the adjustment “repair of equipment,”

Implementing New International Standards

Late last year, the International Monetary Fund released the sixth edition of the Balance of Payments and Interna- tional Investment Position Manual. This update, the first since 1993, was coordinated with the update of the Sys-tem of National Accounts in order to increase consistency between the two sets of international guidelines. At about the same time, the Organisation for Economic Co-opera- tion and Development updated its Benchmark Definition of Foreign Direct Investment. The release of these updated standards provides an opportunity for BEA to consider introducing new treatments that bring its international economic accounts into closer alignment with the accounts of other nations. It also provides an opportu- nity to consider changes in definitions, classifications, methodology, and presentation that are not related to the new standards but that further enhance the overall qual-ity and usefulness of the accounts.

BEA’s international economic accounts directorate has formed a steering committee to develop a strategy and establish processes for identifying, evaluating, and ulti-mately implementing new international standards and other important changes. The committee will consider not only the economic and statistical significance of pro-posed changes but also practical matters such as resource requirements, source data availability, data processing needs, estimation issues, and implications for publication tables and data dissemination. This comprehensive review will provide an opportunity to rethink both prod-ucts and processes and BEA’s relationships with its cus-tomers and suppliers.

BEA will ultimately focus its efforts on those changes that will improve the comparability of the international economic accounts with the accounts of other nations, especially major trading and investment partners, and will further integrate BEA’s international, national, industry, and regional economic accounts. Some of the recommendations in the new international standards are relatively straightforward and, in principle, should not be difficult to implement, although practical problems

could arise. For example, this article describes the imple­mentation of a new treatment of disaster-related insur­ance losses recovered that was first proposed in the System of National Accounts update and ultimately appeared in the Balance of Payments and International Investment Position Manual. Implementing this change did not require new source data and could be handled within the framework of the existing data processing sys­tem. Some of the other recommended changes are pri­marily changes in presentation of existing data that would result in changes to table formats but that would not require new source data. Other changes are more complex and would require new source data, new meth­odologies and presentations, and possibly new data pro- cessing applications. For example, the updated manual recommends that goods that cross borders simply for further processing and do not change ownership (goods for processing) should not be included in merchandise exports and imports. Instead, the value of the processing service (the processing fee) should be treated as trade in services. If implemented in its entirety, this recommen­dation would require not only the collection of new data on processing services but also an adjustment of mer-chandise trade data to exclude particular types of goods from both exports and imports.

As part of its review of the new standards and evalua­ tion of the feasibility of implementing changes, BEA will consult with both its source data suppliers and its major external and internal customers to determine if new data can be obtained and to understand the challenges that customers will face in their use of BEA statistics. BEA views the implementation of new standards and other major changes as a multiyear process that will occur in phases. However, BEA plans to begin introducing changes in the annual revision scheduled to be released in June 2010. BEA looks forward to working with its cus­tomers and suppliers as it further develops plans for implementing new international standards and other improvements to the international accounts.

46 U.S. International Accounts July 2009

which was previously included in “other adjustments, net,” is now shown separately. Repair of equipment covers the value of repairs or alterations of equipment

imported into the United States; these data are de- ducted from goods exports and added to exports of

private services. Lines for the adjustments “inland U.S. freight to Canada” and “U.S.-Canadian reconciliation adjustments, n.e.c., net” were eliminated because the source data now include these adjustments.

For imports, the adjustment “software revaluation” was moved from “other adjustments, net,” and it is now shown separately. This adjustment is necessary to

bring imports of certain computer software reported at

media value to market value as required for both the international and national accounts. The adjustment “locomotives and railcars” is now shown separately.

Table E. Revisions to U.S. International Transactions—Continues

[Millions of dollars; quarters seasonally adjusted] Exports of goods and services and income receipts Previously

published

1992 ................................. 1993–2000 not revised 2001 ................................. 2002 ................................. 2003 ................................. 2004 ................................. 2005 ................................. 2006 ................................. 2007 ................................. 2008 ................................. 1992: I ............................

II ........................... III .......................... IV.......................... 1993–2000 not revised 2001: I ............................ II ........................... III .......................... IV.......................... 2002: I ............................ II ........................... III .......................... IV.......................... 2003: I ............................ II ........................... III .......................... IV.......................... 2004: I ............................

II ........................... III .......................... IV.......................... 2005: I ............................ II ........................... III .......................... IV.......................... 2006: I ............................ II ........................... III .......................... IV.......................... 2007: I ............................ II ........................... III .......................... IV.......................... 2008: I ............................ II ........................... III .......................... IV..........................

350,489 334,968 312,094 298,144 302,429 314,174 321,743 317,321 321,626 324,745 335,183 356,654 375,712 387,382 396,956 414,275 434,701 447,848 457,508 478,958 504,862 529,782 543,893 563,627 572,182 602,122 638,393 650,808 651,416 671,888 678,258 589,692

350,489 ............................. 334,968 ............................. 312,093 –1 298,144 ............................. 303,113 314,893 322,397 318,013 322,280 325,332 335,764 357,265 375,738 387,174 396,473 413,584 434,626 447,206 456,955 477,936 503,350 528,763 540,184 561,608 574,689 600,300 631,854 655,255 654,217 671,886 673,383 591,747

684 719 654 692 654 587 581 611 26 –208 –483 –691 –75 –642 –553 –1,022 –1,512 –1,019 –3,709 –2,019 2,507 –1,822 –6,539 4,447 2,801 –2 –4,875 2,055

–442,826 –416,706 –400,657 –368,912 –388,601 –415,267 –423,307 –424,810 –439,095 –437,889 –448,024 –464,810 –489,177 –521,673 –534,133 –569,854 –580,114 –600,704 –617,311 –660,097 –679,297 –705,572 –730,083 –723,303 –738,938 –771,262 –783,548 –788,264 –796,593 –825,091 –829,558 –693,564

–442,884 –416,828 –400,716 –369,050 –388,736 –415,445 –423,480 –424,949 –439,190 –438,044 –448,175 –464,962 –489,332 –521,845 –534,397 –570,166 –580,374 –601,069 –617,635 –660,557 –681,005 –707,132 –730,097 –727,946 –742,980 –765,079 –774,912 –789,703 –800,185 –828,458 –825,200 –715,096

–58 –122 –59 –138 –135 –178 –173 –139 –95 –155 –151 –152 –155 –172 –264 –312 –260 –365 –324 –460 –1,708 –1,560 –14 –4,643 –4,042 6,183 8,636 –1,439 –3,592 –3,367 4,358 –21,532

–15,171 –15,802 –2,941 –17,374 –18,542 –15,007 –15,005 –16,394 –18,219 –17,600 –17,707 –18,269 –22,987 –21,385 –17,289 –22,822 –28,644 –24,964 –9,090 –27,085 –21,516 –24,116 –24,716 –21,679 –30,174 –24,953 –27,796 –29,784 –31,731 –29,034 –29,998 –28,949

–15,171 ............................. –15,802 ............................. –16,134 –13,192 –17,374 ............................. –18,542 ............................. –15,007 ............................. –15,005 ............................. –16,394 ............................. –18,219 ............................. –17,600 ............................. –17,707 ............................. –18,269 ............................. –22,987 ............................. –21,385 ............................. –21,141 –3,852 –22,850 ............................. –28,723 –25,196 –24,658 –27,194 –20,995 –23,708 –24,876 –21,693 –30,807 –25,752 –28,557 –30,883 –33,330 –31,147 –32,361 –31,527

–79 –232 –15,568 –109 521 408 –160 –14 –633 –799 –761 –1,099 –1,599 –2,113 –2,363 –2,578

750,648 1,295,693 1,255,663 1,338,213 1,574,326 1,819,016 2,142,164 2,463,505 2,591,254 186,444 186,873 188,127 189,201

Revised

Revision

Imports of goods and services and income payments Previously published

–765,626 –1,629,097 –1,651,990 –1,789,819 –2,114,837 –2,458,225 –2,838,254 –3,082,014 –3,144,807 –185,468 –190,414 –193,313 –196,427

Revised

Revision

Unilateral current transfers, net (inflows +, outflows –) Previously published

–35,100 –51,295 –64,948 –71,794 –84,482 –89,784 –92,027 –112,705 –119,713 –7,210 –8,349 –7,982 –11,561

Revised

–36,636

Revision

–1,536

750,648 ............................. 1,295,692 1,258,411 1,340,647 1,572,971 1,816,723 2,133,905 2,462,099 2,591,233

–1 2,748 2,434 –1,355 –2,293 –8,259 –1,406 –21

–765,626 ............................. –1,629,475 –1,652,615 –1,790,372 –2,115,739 –2,459,633 –2,846,179 –3,072,675 –3,168,938

–378 –625 –553 –902 –1,408 –7,925 9,339 –24,131

–64,487 –13,192 –64,948 ............................. –71,794 ............................. –88,362 –3,880 –105,772 –15,988 –91,273 754 –115,996 –3,291 –128,363 –8,650 –7,210 ............................. –8,349 ............................. –9,517 –1,535 –11,561 ............................. 186,444 ............................. 186,873 ............................. 188,127 ............................. 189,201 ............................. –185,468 ............................. –190,414 ............................. –193,313 ............................. –196,427 .............................

See the footnotes at the end of the table.

July 2009 SURVEY OF CURRENT BUSINESS 47

The line for “U.S.-Canadian reconciliation adjust- ments, n.e.c., net” has been eliminated because the

source data now include this adjustment. The adjust- ment “electric energy” is now included with other ad-justments with relatively smaller values in “other adjustments, net.”

A minor modification was also made to table 2, part C “trade in goods, by principal end-use category.” On the import side, in “capital goods, except automotive” (line 116, page 80), the line for “transportation equip­ment, except automotive” was eliminated, and a line for “other transportation equipment” was added. The

new layout is consistent with the comparable layout on

the export side.

Table E. Revisions to U.S. International Transactions—Table Ends

[Millions of dollars; quarters seasonally adjusted] Balance on current account Previously

published

1992 ................................. 1993–2000 not revised 2001 ................................. 2002 ................................. 2003 ................................. 2004 ................................. 2005 ................................. 2006 ................................. 2007 ................................. 2008 ................................. 1992: I ............................

II........................... III .......................... IV.......................... 1993–2000 not revised 2001: I ............................ II ........................... III .......................... IV.......................... 2002: I ............................ II........................... III.......................... IV.......................... 2003: I ............................ II ........................... III.......................... IV.......................... 2004: I ............................

II ........................... III.......................... IV.......................... 2005: I ............................ II........................... III.......................... IV.......................... 2006: I ............................ II ........................... III.......................... IV.......................... 2007: I ............................ II ........................... III.......................... IV.......................... 2008: I ............................ II ........................... III.......................... IV..........................

–107,508 –97,540 –91,504 –88,142 –104,714 –116,100 –116,569 –123,883 –135,688 –130,744 –130,548 –126,425 –136,453 –155,676 –154,466 –178,401 –174,057 –177,821 –168,892 –208,223 –195,952 –199,906 –210,906 –181,355 –196,930 –194,093 –172,952 –167,241 –176,909 –182,237 –181,299 –132,822

–107,567 –97,662 –104,757 –88,280 –104,166 –115,559 –116,088 –123,329 –135,129 –130,312 –130,118 –125,966 –136,581 –156,055 –159,066 –179,432 –174,471 –179,059 –185,339 –209,815 –198,651 –202,078 –214,789 –188,031 –199,098 –190,531 –171,614 –165,330 –179,298 –187,719 –184,178 –154,875

–59 –122 –13,253 –138

548 541 481 554 559 432 430 459 –128 –379 –4,600 –1,031 –414 –1,238 –16,447 –1,592 –2,699 –2,172 –3,883 –6,676 –2,168 3,562 1,338 1,911 –2,389 –5,482 –2,879 –22,053

–301 –313 –333 –323 –321 –333 –399 –417 –489 –1,663 –909 –419 –487 –427 –952 –503 –2,594 –510 –467 –465 –1,716 –1,005 –533 –626 –543 –112 –617 –571 –600 –631 –735 –633

–301 ............................ –313 ............................ 12,859 13,192 –323 ............................ –321 ............................ –333 ............................ –399 ............................ –417 ............................ –489 ............................ –1,663 ............................ –909 ............................ –419 ............................ –487 ............................ –427 ............................ 2,739 3,691 –503 ............................ –2,594 ............................ –510 ............................ 14,913 15,380 –465 ............................ –1,721 –1,017 –539 –629 –549 –124 –625 –597 –637 –682 2,967 –695

–5 –12 –6 –3 –6 –12 –8 –26 –37 –51 3,702 –62

114,573 120,165 57,084 108,433 88,384 91,613 161,227 159,288 158,593 60,305 128,422 185,563 105,507 161,128 104,685 161,012 105,007 82,483 221,043 292,183 179,674 184,270 253,223 221,908 265,443 193,549 101,942 213,411 187,238 120,599 147,327 1 76,830

114,573 ............................. 120,165 ............................. 57,084 ............................. 108,433 ............................. 88,384 ............................. 91,613 ............................. 161,227 ............................. 159,288 ............................. 158,593 ............................. 60,305 ............................. 128,422 ............................. 185,563 ............................. 105,507 161,128 104,685 161,012

............................. ............................. ............................. .............................

–50,078 –384,699 –461,275 –523,400 –624,993 –728,993 –788,116 –731,214 –673,265 –6,234 –11,890 –13,168 –18,787

Revised

–51,613 –398,270 –459,151 –521,519 –631,130 –748,683 –803,547 –726,573 –706,068

Revision

–1,535 –13,571 2,124 1,881 –6,137 –19,690 –15,431 4,641 –32,803

Capital account transactions, net (inflows +, outflows –) Previously published

–557 –1,270 –1,470 –3,480 –2,369 –4,036 –3,880 –1,843 –2,600 –137 –175 –131 –114

Revised

978

Revision

1,535

Net financial flows (inflows +, outflows –) Previously published

93,939 400,254 500,515 532,879 532,331 700,716 839,074 774,345 1

546,590 18,784 33,497 21,361 20,295

Revised

Revision

93,939 ............................. 400,254 500,515 532,879 532,331 700,716 809,150 663,556 505,060 18,784 33,497 21,361 20,295

............................. ............................. ............................. ............................. .............................

–29,924 –110,789 –41,530 ............................. ............................. ............................. .............................

11,922 13,192 –1,470 ............................ –3,480 ............................ 1,323 3,692 11,344 15,380 –3,906 –26 –1,895 –52 953 3,553 –137 ............................ –175 ............................ 1,404 1,535 –114 ............................

–6,234 ............................. –11,890 ............................. –14,703 –1,535 –18,787 ............................. 105,007 ............................. 82,483 ............................. 221,043 ............................. 292,183 ............................. 159,592 197,789 245,186 206,583 229,889 191,292 91,836 150,539 166,591 106,991 143,144 88,333

–20,082 13,519 –8,037 –15,325 –35,554 –2,257 –10,106 –62,872 –20,647 –13,608 –4,183 11,503

1. The previously published statistics for net financial flows for the fourth quarter of 2008 and for 2008 excluded transactions in financial derivatives because source data were not available for the fourth quarter of 2008.

NOTE. Details may not add to totals because of rounding. Source: U.S. Bureau of Economic Analysis See the following report on financial derivatives.