The U.S. current-account deficit increased to a record $19.4 billion in the first quarter from $17.2 billion (revised) in the fourth, as an increase in the merchandise trade deficit was partly offset by increased net service receipts and lower net unilateral transfers. The merchandise trade deficit increased $6.2 billion to $25.6 billion due to a large increase in nonpetroleum imports, reflecting the rapid gorwth of the U.S. economy and strength of the dollar. Exports increased moderately. Net service receipts increased $3.1 billion to $8.4 billion. Receipts of income on U.S. direct investment abroad increased $3.0 billion to $8.0 billion; receipts were bolstered by a shift from capital losses to capital gains and moderate recovery in business activity abroad. Payments of income on foreign direct investment in the United States increased slightly to $2.2 billion. Net unilateral transfers decreased $0.9 billion to $2.2 billion. (Revised estimates for 1983 and earlier years are presented in this article and accompanying tables. See Technical Notes.)
Among private capital transactions, U.S. claims on foreigners reported by banks increased $0.3 billion in the first quarter, compared with an $8.2 billion increase in the fourth, reflecting strong domestic credit demands relative to credit demands abroad and banks’ caution about external exposure. U.S. liabilities to private foreigners and international financial institutions reported by banks increased $11.3 billion, compared with $24.0 billion. Borrowing from own foregin offices abroad declined, reflecting ample availability of domestic funds. Out-flows for U.S. direct investment abroad were $3.2 billion, compared with $1.6 billion. Foreign direct investment in the United States slowed to a $1.9 billion increase from a $2.3 billion increase. The statistical discrepancy (errors and omissions in reported transactions) was an inflow of $13.5 billion. U.S. dollar in exchange marekts
The U.S. dollar appreciated moderately during the first quarter, rising 3 percent on a trade-weighted, quarterly average basis against the currencies of 22 OECD countries and 1 percent against the currencies of 10 industrial countries. The dollar ended the quarter lower than it began for all major European currencies except the British pound.
During the quarter, dollar fluctuations against European currencies reflected the shifting influences of rising U.S. interest rates, expectations about prospects for U.S. growth and inflation, and political and military tensions. The dollar hit record levels in mid-January against several European currencies–the German mark, French franc, Italian lira, and British pound. The preceding 3-month runup was largely attributable to high U.S. interest rates, to perceptions that U.S. growth would continue to be stronger than growth abroad, and to military conflict in the Middle East. Also, the British pound was weakened by concern about the British current account stemming from rumors that the new Nigerian Government might withdraw from OPEC and lower petroleum prices.
Subsequently, the dollar, through the end of February, depreciated sharply against european currencies, as recovery in a few major trading partners strengthened moderately and as concerns mounted over the sizes of the U.S. Federal budget and current-account deficits and a pickup in U.S. inflation. In contrast to recent quarters, the depreciation occurred despite increases in U.S. interest rates relative to stable or declining foreign rates. This pattern suggests that both the decline in the dollar and the higher interest rates might have reflected, at least temporarily, renewed concern about inflation. In March, the dollar recovered part of its loss as U.S. short-term interest rates rose 55-80 basis points.
The dollar depreciated 1 percent on average against the Japanese yen in the first quarter. In late February, the yen appreciated upon introduction of a series of bills in the Japanese parliament designed to increase the international demand for the yen.
The rise in U.S. interest rates relative to higher Canadian rates and uncertainties over future Canadian elections led to a 1-percent appreciation against the canadian dollar. The U.S. dollar appreciated 5 percent against the Mexican peso. Beginning in the fourth quarter, Mexican authorities began daily controlled devaluations of the peso in order to partly offset domestic inflation. Merchandise trade
The U.S. merchandise trade deficit increased $6.2 billion to $25.6 billion in the first quarter, the fourth consecutive quarterly record deficit. A strong increase in nonpetroleum imports, due to the rapid expansion of the domestic economy, together with the strong U.S. dollar, accounted for the larger deficit. Petroleum imports decreased slightly. Both agricultural and nonagricultural exports increased moderately.
Imports continued their strong increase, up $8.6 billion, or 12 percent, to $79.8 billion. Since the end of the recession in the fourth quarter of 1982, the increase in imports has acounted for nearly one-quarter of the increase in total U.S. purchases of goods (see accompanying tabulation).
As shown in chart 7, the high marginal rate of importation has increased the average percentage of imported goods in total domestic goods purchases to record levels during the last two quarters.
Nonpetroleum imports increased $9.0 billion, or 16 percent, to $66.0 billion; volume increased 17 percent. Capital goods increased $2.9 billion, and showed increases in all major categories, especially in business machines and computers, which increased $0.8 billion, or 32 percent, for the quarter, and 87 percent over the past year, and in electrical machinery, up $0.7 billion, or 19 percent, for the quarter. Consumer goods increased $2.2 billion, about equally divided between durable and nondurable goods. There were strong increases in gem diamonds to rebuild stocks after strong fourth-quarter sales, and in apparel. Numismatic coins decreased $0.4 billion, after a bunching of deliveries from South Africa in the fourth quarter. Industrial supplies and materials increased $1.9 billion, led by a turn-around in precious metals and by increases in iron and steel. brazil imposed a 27-percent export tax on selected steel products shipped to the United States to preempt possible imposition of a U.S. import tax. The action followed a ruling in February by the U.S. Department of Commerce that subsidies on Brazilian shipments were harmful to the U.S. steel industry. Automotive imports increased $1.1 billion, mostly from Canada. Foods, feeds, and beverages increased $0.6 billion.
Petroleum imports decreased $0.4 billion or 3 percent, to $13.9 billion. The average price per barrel decreased to $28.05, from $28.30, as worldwide supplies remained plentiful. Volume decreased to 5.40 million barrels per day, from 5.53 million, due to a decrease in consumption; inventories rose slightly. Imports from OPEC members decreased $1.0 billion and those from Western Europe increased $0.6 billion.
Exports increased $2.3 billion, or 5 percent. Volume increased 4 percent. At $54.2 billion, exports were 12 percent above the low in the fourth quarter of 1982 and have made up about one-half the drop that occurred in 1981 and 1982. However, the pickup has been selective; agricultural exports and automotive exports to Canada have accounted for more than two-thirds of the increase. Export expansion has been slower than the rapid growth in domestic output of goods, substantially reducing the percentage of total goods output exported (chart 7).
Agricultural exports increased $0.5 billion, or 5 percent, to $10.3 billion; volume increased 4 percent. Prices of cotton and corn increased 3 percent and 1 percent, respectively; prices of soybeans and wheat declined 4 percent and 2 percent. Oils and sunflower seeds increased to $0.7 billion from $0.2 billion, due to large PL-480 shipments of sunflower seeds to Mexico as a substitute for soybeans, which were in short supply because of last year’s drought.
Nonagricultural exports increased $1.9 billion, or 4 percent, to $43.9 billion. Volume increased 3 percent. Automotive exports increased $0.6 billion, as strong sales of U.S. model cars assembled in Canada led to a $0.2 billion increase in exports of parts and as exports of completed cars, trucks, and buses continued to increase strongly. Capital equipment increased $0.6 billion, led by a $0.2 billion increase in computers and parts and a $0.3 billion increase in electrical equipment; completed aircraft decreased $0.3 billion. Exports of industrial supplies and materials and of consumer goods remained at the low levels that have prevailed since 1982, reflecting limited growth in demand abroad and the strength of the dollar. Service transactions
Net service receipts increased $3.1 billion to $8.4 billion. Receipts increased $3.4 billion to $36.5 billion, largely due to higher direct investment income receipts. Payments increased $0.3 billion to $28.1 billion.
Receipts of income on U.S. direct investment abroad increased $3.0 billion to $8.0 billion, following a low fourth quarter. There was a $2.6 billion shift from large capital losses to small capital gains, primarily from exchange rate changes. Operating earnings increased $0.2 billion as higher manufacturing earnings reflected the moderate recovery in business activity abroad. Earnings were lower in petroleum and other industries. Earnings increased in developing countries in Asia and Africa and declined in Europe and Canada. Payments of income on foreign direct investment in the United States were $2.2 billion, up $0.2 billion, as the U.S. expansion continued. Income of petroleum affiliates declined and that of other industries increased.
Receipts of income on other private investment increased $0.3 billion to $13.7 billion, largely reflecting higher interest rates. U.S. Government income receipts decreased slightly to $1.1 billion. Payments of income on other private investment increased $0.4 billion to $8.3 billion, mostly due to the increase in U.S. bank liabilities in recent quarters U.S. Government payments increased slightly to $4.6 billion.
Travel receipts increased $0.2 billion to $3.0 billion. Increased receipts from overseas, especially the Far East, were partly offset by a drop in receipts from Canada and Mexico. Payments decreased $0.2 billion to $3.6 billion. Payments overseas and to Mexico dropped; payments to Canada increased. Passenger fare receipts increased $0.1 billion to $0.9 billion; payments were unchanged at $1.4 billion.
Other transportation receipts were unchanged at $3.3 billion; payments increased slightly to $3.5 billion. Air freight payments were up strongly. Higher ocean freight payments for tramp and liner charges were offset by lower tanker charges.
Transfers under U.S. military sales contracts decreased $0.2 billion to $2.6 billion, the lowest level in 3 years. Many major weapons delivery programs have recently been completed and deliveries under new programs, although scheduled, have not yet begun. Direct defense expenditures abroad decreased $0.2 billion to $2.9 billion, primarily from declining petroleum expenditures and reduced disbursements on an engineering contract in the Middle East.
Other private service receipts and payments each rose $0.1 billion to $1.7 billion and $1.0 billion, respectively.
Net unilatreal transfers decreased $0.9 billion to $2.2 billion, due to lower U.S. Government grants. Disbursement fell because Israel drew all grant funds for the current fiscal year during the fourth quarter. U.S. assts abroad
U.S. official reserve assets increased $0.7 billion in the first quarter. Foreign currency holdings increased $0.2 billion, due to limited intervention to support the German mark in January and interest earned on mark and yen holdings. The U.S. reserve position with the International Monetary Fund (IMF) and holdings of special drawing rights (SDR’s) each increased $0.2 billion.
U.S. claims on foreigners reported by U.S. banks increased $0.3 billion, compared with an $8.2 billion increase in the fourth quarter. The slowdown reflected strong growth in domestic bank lending (up 20 percent), continued sluggishness in international demand for U.S. bank credit, and hesitancy by many banks to increase their foreign exposure in the face of financial difficulties in a number of developing countries. In addition, some yearend transactions were reversed in January, and there was greater use of alternative sources of financing, especially floating rate notes and Eurobonds. Large credit lines were established with U.S. bank branches and foreign banks abroad for possible use in corporate takeovers, but relatively small amounts were actually drawn during the quarter.
Geographically, reductions in claims were widespread. Most of the interbank reductions were on Caribean banking centers and Japan, while reductions in other claims were mostly on countries in Asia and Europe. Claims increased on Canada, and on own foreign offices in the United Kingdom. Claims on Brazil increased in March due to U.S. bank participation in the first tranche of an IMF-arranged $6.5 billion loan associated with rescheduling of Brazil’s foreign debts.
Net U.S. sales of foreign securities were $0.2 billion, the first quarter of net sales in almost a decade. New foreign bond issues in the United States, at $0.7 billion, were low for the second consecutive quarter and limited to a few Canadian issues. Concern about volatility of the dollar and rising U.S. interest rates led to a shift from U.S. markets to other international bond markets, where borrowing was at record levels in the first quarter. Holdings of outstanding bonds declined $0.6 billion, compared with no net change, due to scheduled redemptions. Net sales of foreign stocks were $0.4 billion, compared with net purchases of $0.1 billion, as rises in most foreign stock markets moderated, especially in the last half of the quarter. Rising interest rates may also have attracted funds away from equity markets. Net U.S. sales of Canadian stocks increased as the Canadian market declined. Net sales of Japanese stocks continued for a second quarter, probably reflecting some profit taking.
Outflows from U.S. direct investment abroad were $3.2 billion, compared with $1.6 billion. Equity capital outflows declined to $0.7 billion, from $2.5 billion. Outflows to Europe and Latin America slowed, and no transactions were comparable to the large fourth-quarter conversion from debt to equity by an African petroleum affiliate. Net intercompany debt inflows slowed $0.6 billion to $2.3 billion. (Fourth-quarter inflows had been increased by the conversion mentioned above.) A shift to outflows to Canada was partly offset by a shift to inflows from Europe. Inflows from Netherlands Antilees finance affiliates dropped $0.7 billion to a $1.1 billion increase, the lowest level since the second quarter of 1981. The decline reflected increased repayments of previously borrowed funds and some tendency for those affiliates to transfer funds to other foreign affiliates instead of remitting the proceeds of new issues to the U.S. parent. Reinvested earnings increased $2.9 billion to $4.8 billion, as large capital losses in the fourth quarter shifted to small capital gains in the first. Foreign assets in the United States
Foreign official assets in the United States shifted to a decrease of $2.9 billion from an increase of $6.6 billion. Assets of industrial countries decreased $0.9 billion, reflecting intervention by foreign authorities to support their currencies against the dollar in exchange markets in January. Assets of OPEC members decreased $2.5 billion, reflecting continued weakness in petroleum revenues. Assets of other countries increased $0.6 billion; decreases in assets of several Asian countries were more than offset by increases of several Latin American countries.
U.S. liabilities to private foreigners and international financial institutions reported by banks (including U.S. Treasury securities) increased $11.3 billion, compared with $24.0 billion. The slowdown was concentrated in drawings on foreign offices, which increased $1.4 billion, compared with $15.5 billion. The decline reflected the reduced need to draw funds from abroad and the reversal in January of some large yearend inflows. Liabilities to unaffiliated banks and other private foreigners increased $6.9 billion, compared with $8.0 billion. Inflows were at a record rate in March, as U.S. interest rates rose sharply and the dollar strengthened. In contrast to the fourth quarter, when U.S.-owned banks accounted for most of the increase, foreign-owned banks in the United States accounted for two-thirds of the increase in the first quarter. Inflows were largely from the United Kingdom, from Canada, and from several Caribbean and Latin American countries.
Net foreign purchases of U.S. securities other than U.S. Treasury securities increased $0.4 billion to $1.5 billion. Stock purchases increased $0.8 billion to $1.2 billion; European buyers reversed their last quarter’s selloff, and Canadians more than doubled their purchases to a quarterly record of $0.7 billion. Much of the increase occurred late in the quarter, when the U.S. stock market and the dollar were both rising. Net sales by British residents continued. Net foreign purchases of bonds, which fell $0.3 billion to $0.4 billion, were mostly concentrated in the United Kingdom and Japan.
Inflows for foreign direct investment in the United States slowed to a $1.9 billion increase from a $2.3 billion increase. There were widespread decreases in equity capital inflows, which were down $0.7 billion to $0.6 billion, especially from the United Kingdom and Canada. Reinvested earnings continued to increase, up $0.3 billion to $1.0 billion. Intercompany debt inflows were virtually unchanged at $0.3 billion; outflows for manufacturing and petroleum affiliates were more than offset by inflows for other affilates.
As is customary each June, estimates of U.S. international transactions are revised to incorporate new information. Revised annual estimates for 1960-83 and quarterly estimates for 1978-83 are presented in tables 1 and 2. Revised annual estimates for 1973-83 and quarterly estimates for 1982 and 1983 are presented in table 3. Revised annual estimates for 1981-83 and quarterly estimates for 1982 and 1983 are presented in tables 4-10. Table 10a presents revised annual estimates for 1981-83.
Seasonal adjustment for selected current-account items and for changes in U.S. Government assets, other than official reserve assets, were recalculated by extending through 1983 the period used to derive seasonal adjustment factors. The new factors were applied to quarterly data for 1982 and 1983. (For seasonal adjustment and other changes involving direct investment-related items, see the section on direct investment estimates which follows.)
The geographic detail shown in section B of table 3 has been expanded by the addition of 17 lines. Shown for the first time are the individual European Communities (EC6) countries, Brazil, Venezuela, members of OPEC in Asia, China, Hong Kong, Korea, Singapore, Taiwan, and members of OPEC in Africa. Annual data for the new lines are available since 1978; quarterly data are available since 1982. The expansion of geographic detail necessitated a change in the seasonal adjustment procedure for section B of the table. Under the new procedure, unadjusted data for each country or area are split into agricultural and nonagricultural exports and petroleum and nonpetroleum imports. Each cell is then seasonally adjusted by the corresponding implicit global factor derived from estimates in section D. The cells are summed to derive country and area export and import totals. Previously, each cell was seasonally adjusted separately by its own seasonal factor, and the data derived were forced to a global control total.
Significant revisions were made in the 1980-83 estimates for travel and passenger fare receipts (lines 4 and 5)–mainly from overseas visitors. Until mid-1979, the U.S. Immigration and Naturalization Service (INS) tabulated the forms that each nonresident alien must file upon entry into the United States. These tabulations were the source of BEA’s estimates of foreign visitors. This year the INS resumed tabulating forms; a tabulation was made for 1983 and partial tabulations were made for 1981-82. These tabulations, along with BEA’s estimates of foreign visitors in 1979 and 1980, are the basis for the revised overseas travel and passenger fare receipts for 1980-83. Revisions were made also in the 1982-83 estimates of receipts from Mexican visitors to the border area of the United States. Prior to 1982, BEA used the Bank of Mexico’s data on sales and purchases of U.S. dollars through Mexican border area banks as a basis for estimates of these receipts. However, during the period of peso depreciation in 1982 and 1983, when the Mexican Government set official exchange rates offered by banks well below market rates, much of the currency exchange took place outside the banking system, rendering banking data inadequate as a basis for estimates. In response, the Bank of Mexico began conducting personal expenditure interviews with Mexicans in the border area as they returned from the United States. This expenditure survey is the basis for the revisions to 1982-83 border area receipts.
U.S. transactions with the International Telecommunications Satellite Organization (Intelsat) are now recorded as transactions with a non-U.S. resident to reflect Intelsat’s status as an international organization. Previously, Intelsat–whose headquarters are located in the United States–was treated as a U.S. resident, and its transactions with other countries were recorded in the U.S. international transactions accounts. Those transactions have been removed from the accounts, and transactions between U.S. residents and Intelsat are now included. U.S. transactions with Intelsat consist mainly of sales of goods and services (including satellites and launching services) to Intelsat and returns on U.S. capital contributions to Intelsat, which are recorded as U.S. receipts; charges to the United States for the use of Intelsat’s international communications satellite channels, which are recorded as U.S. payments; and U.S. capital contributions to Intelsat, which are recorded as U.S. capital outflows (an increase in U.S. assets). Revisions to published estimates were made for 1980-83. Direct investment estimates
Change in treatment of unincorporated affiliates. –Beginning with the years of the most recent benchmark surveys (1982 for U.S. direct investment abroad and 1980 for foreign direct investment in the United States), the treatment of unincorporated affiliates has been changed to parallel that of incorporated affiliates. Previously, less detail, by component, for direct investment income and capital flows was obtained for unincorporated affiliates than for incorporated affiliates; now, similar detail is obtained for both types of affiliates. This change is possible because, over time, the accounting procedures of unincorporated businesses have become more similar to those of incorporated businesses. Although the change does not affect the totals for direct investment income and capital flows shown in table 1, it does affect the individual components of these items, as shown in table 5. For years prior to 1982 for U.S. direct investment abroad and to 1980 for foreign direct investment in the United States, estimates on the new basis cannot be computed, because the necessary detail is not available.
Previously, reinvested and remitted earnings of unincorporated affiliates were not reported separately. Instead, (1) in the income account, total earnings of these affiliates were treated as if they were remitted and (2), in the capital account, earnings actually reinvested rather than remitted were treated as transfers of cash or other assets from parents to affiliates and were included, along with other capital flows, in a single summary account in the “equity and intercompany accounts” component of direct investment capital flows. The term “reinvested earnings” referred only to incorporated affiliates. Now, reinvested and remitted earnings of unincorporated affiliates are reported separately. The remitted portion is included, together with dividends of incorporated affiliates, in distributed earnings of all affiliates (line 5 or 41 of table 5), and, in both the income and capital accounts; the reinvested portion is included, together with reinvested earnings of incorporated affiliates, in reinvested earnings of all affiliates (lines 6 and 12 or 42 and 50).
In addition, capital flows to unincorporated affiliates, which–as noted earlier–were previously shown together as a single summary account in equity and intercompany account flows, have now been split into the equity, intercompany debt, and reinvested earnings portions. The equity portion is now included, together with equity flows to incorporated affiliates, in equity capital flows to all affiliates (line 9 or 47 of table 5); the intercompany debt portion is included, together with intercompany debt flows to incorporated affiliates, in intercompany debt flows to all affiliates (line 13 or 51); and, as noted, the reinvested earnings portion is included, together with reinvested earnings of incorporated affiliates, in reinvested earnings of all affiliates (line 12 or 50). For unincorporated affiliates that were unable to separate equity capital from intercompany debt, the entire amount was considered equity capital.
Revision of seasonal adjustment procedures. –Primarily because of the change in treatment of unincorporated affiliates and resulting changes in data presentation, the procedures for seasonally adjusting income on U.S. direct investment abroad have been revised. All items, including income, for foreign direct investment in the United States continue not to be seasonally adjusted.
Previously, for U.S. direct investment abroad, total income and “interest dividends, and earnings of unincorporated affiliates” were each seasonally adjusted, and seasonally adjusted “reinvested earnings of incorporated affiliates” were derived as a residual. The seasonal factors were calculated and the adjusted estimates were obtained for petroleum and non-petroleum affiliates separetely.
With the change in treatment of unincorporated affiliates, the components of direct investment income have been regrouped. In the past, the major components were “interest, dividends, and earnings of unincorporated affiliates” and “reinvested earnings of incorporated affiliates”; now, they are “interest” and “earnings” (of both incorporated and unincorporated affiliates). Earnings has, in turn, been disaggregated into “distributed earnings” and “reinvested earnings” (of both incorporated and unincorporated affiliates).
Under the revised procedure, seasonal factors are directly applied to the various components of income, rather than to the total, and the various components are then summed. Interest, by itself, has been determined to have no seasonal pattern and, therefore, no adjustment is required. Earnings, calculated before capital gains (losses), do have a seasonal pattern and are seasonally adjusted; capital gains (losses) are excluded from earnings in calculating the seasonal factor because of their sporadic nature and the current absence of any discernible seasonal pattern. Although distributed earnings display a seasonal pattern, data on distributed earnings of unincorporated affiliates are available only for 2 full years (1982 and 1983)–not a long enough period to allow the calculation of seasonal factors using the Census Bureau’s X-11 seasonal adjustment program. Thus, only distributed earnings of incorporated affiliates (dividends) can be seasonally adjusted using the X-11 programs; distributed earnings of unincorporated affiliates are adjusted informally, based on the distribution of data among the quarters of the 2 years for which complete data are available. The sum of seasonally adjusted distributed earnings for both types of affiliates is then subtracted from seasonally adjusted total earnings, after unadjusted capital gains (losses) have been added back in, to derive seasonally adjusted reinvested earnings. When data become available for distributed earnings of unincorporated affiliates over a sufficient time period, total distributed earnings will be seasonally adjusted using the X-11 program. As before, the seasonal factors are calculated and applied separately to the estimates for petroleum and nonpetroleum affiliates.
Because reinvested earnings are a component of direct investment capital outflows as well as income, the revised procedure for deriving seasonally adjusted reinvested earnings also affects total capital outflows. The major change is that seasonally adjusted reinvested earnings now include an adjusted estimate for unincorporated as well as for incorporated affiliates, whereas, in the past, they consisted only of an adjusted estimate for the latter. The other two major components of direct investment capital outlfows–equity capital and intercompany debt–continue to show no seasonal pattern and require no adjustment.
Gross recording of interest and of fees and royalties. — For foreign direct investment in the United States, separate quarterly estimates of payments and receipts of interest on intercompany debt and of fees and royalties (lines 44-45 and 55-56, respectively, of table 5) are available for 1980 forward. For prior years, only estimates of the net amount of such payments (receipts) are available because, although payments and receipts were reported separately, universe estimates were prepared only for the net amount.
For U.S. direct investment abroad, separate quarterly estimates of receipts and payments of interest and of fees and royalties are not yet available for any year. They will be available, starting with the year 1982, when these series have been revised to incorporate the results of the 1982 benchmark survey of U.S. direct investment abroad (this revision is scheduled for 1986); for years prior to 1982, estimates will continue to be available only on the net basis.
Benchmark revisions of the series on foreign direct investment in the United States. –The series on foreign direct investment in the United States for 1980 forward have been revised to incorporate the results of BEA’s 1980 benchmark survey. Previous estimates for these years were based on the results of the 1974 benchmark survey. The revised estimates are preliminary. Final estimates for 1980-82 and revised, but still preliminary, estimates for 1983 will be published, together with an explanation of the benchmarking procedure, in the annual article on foreign direct investment in the United States, which will appear later this year in the SURVEY OF CURRENT BUSINESS.
Inclusion of data on capital inflows to establish or acquire new U.S. affiliates. –Data on capital inflows to establish or acquire new U.S. affiliates are not reported in BEA’s quarterly sample survey if the newly established or acquired U.S. affiliates are below that survey’s exemption level. Also, because equity capital inflows are not expanded to universe levels, no estimate of such unreported inflows would normally be made. Available data from BEA’s survey of establishments and acquisitions of new U.S. affiliates (the BE-13), however, indicate that, because of the large number of transactions involved, these inflows, although small for any given affiliate, were large in total during 1981-83. Therefore, quarterly estimates of these unreported inflows were made utilizing BE-13 data on total outlays to establish or acquire new U.S. affiliates.
Such outlays would constitute direct investment capital inflows, and should be included in the U.S. international transactions accounts, if they were made directly by foreign parents. (If, instead, they were made indirectly through the parents’ existing U.S. affiliates, and the funds came from abroad, they would constitute capital inflows, but the inflows probably would have been reported in the existing U.S. affiliate’s quarterly report.) The BE-13 survey indicates that direct outlays by foreign parents to establish or acquire U.S. affiliates that did not report in the quarterly sample survey were $977 million in 1981, $663 million in 1982, and $314 million in 1983. These data were added to reported direct investment capital inflows for the 3 years; for any given affiliate, the data were included in inflows in the quarter in which the acquisition or establishment occurred.
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