Honey, Who Shrunk the U.S. Income Surplus?

Matthew Higgins and Thomas Klitgaard

No 20260518, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Foreign holdings of U.S. financial assets are immense, with official estimates putting their current market value at $69 trillion. U.S. holdings of foreign assets are also impressive but much smaller, at $41 trillion. The shortfall in U.S. foreign assets relative to foreign liabilities has been mounting for decades. Yet U.S. investment income receipts—in profits, dividends, and interest—comfortably exceeded income payments until recently. We show that the fading of the net investment income surplus stems from the upward shift in interest rates in the aftermath of the pandemic along with the continued net sales of U.S. assets to foreign investors.

Keywords: asset position; United States; assets; liabilities; FDI; profits; equity dividends; interest income; balance of payments (search for similar items in EconPapers)
JEL-codes: F2 F3 (search for similar items in EconPapers)
Date: 2026-05-18
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:103264

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DOI: 10.59576/lse.20260518

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