New York Fed warns about $69 trillion foreign investment ‘burden’ on U.S. economy
The New York Fed has raised concerns about the U.S. economy's growing burden of foreign investment, which now totals nearly $69 trillion. This shift has resulted in a significant net international investment position deficit of $28 trillion for the U.S. as domestic investors struggle to maintain returns amidst rising capital outflows and stagnant net investment income.
- ▪The U.S. currently owes nearly $69 trillion in financial assets to foreign investors.
- ▪The gap between U.S. foreign assets and domestic assets held by foreign investors has reached $28 trillion.
- ▪Chronic trade deficits and rising U.S. asset valuations are contributing to the deterioration of the U.S. net investment position.
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For decades, the U.S. enjoyed a peculiar privilege: It owed the world a fortune but somehow still collected more than it had to pay out. The country was effectively able to consistently run up a tab and still walk out ahead. Recommended Video That trick is now running out, according to economists at the Federal Reserve Bank of New York. Overseas investors—from national governments and sovereign wealth funds to pensions and private institutions—currently hold nearly $69 trillion in U.S. financial assets, Fed economists wrote in a blog post published Monday. This includes Treasury bonds, S&P 500 stocks, and direct stakes in American companies. U.S. investors, meanwhile, hold $41 trillion in foreign assets.
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