U.S. Capital Flows in February

April 15, 2009

The February capital flow data compiled by the U.S. Treasury contained good news and bad news.  The data aggregate three measures of net flows:

  1. Net Long-term securities transactions, which generated a net inflow of $22.0 billion compared to a net outflow of $36.8 billion in January.
  2. The first definition modified by swap activity, which produced a $5.0 billion inflow after a net outflow of $54.7 billion in January.
  3. The broadest definition includes many short-term capital movements, and this showed a $97.0 billion outflow in February, 34% smaller than January’s outflow of $146.8 billion.  The good news is that all three definitions produced a more dollar-supportive capital flow in February than January.

The bad news is that the average monthly capital flow in January-February was less supportive than the typical month in 2008, which in turn was less supportive than the flows in 2007.  The three aggregated net capital flows and the U.S. goods and services trade deficit on a per month basis in January-February, 2008, and 2007 are shown below.  Net outflows are denoted by a minus sign, and plus signs denote net capital inflows.

$ billions Jan-Feb ’09 2008 2007
Definition 1 -7.4 +42.9 +64.7
Definition 2 -24.9 +26.5 +45.1
Definition 3 -121.9 +51.0 +51.4
Trade Gap -31.1 -56.8 -58.4

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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