U.S. Foreign Debt Grows by $99 Billion

The United States, already the world’s largest debtor nation, fell another $99 billion in the hole last year despite the stock market crash and the falling dollar, the Commerce Department reported Thursday.

By the end of 1987, the department said, foreign individuals, companies and governments held $368.2 billion more in U.S. assets than the total of American investment abroad.

Despite the enormous U.S. international debt, however, the total return on American investments abroad was $20.3 billion greater in 1987 than total earnings on foreign investments in the United States.

Commerce Undersecretary Robert Ortner conceded that the U.S. surplus in international investment income is declining and eventually will disappear if foreign investment here continues to surpass U.S. investment abroad. But, he noted, the gradual but steady decline in the total U.S. trade deficit inevitably will mean a slowdown in foreign capital flowing to the American economy.

Europeans Big Investors

By year’s end, total foreign assets in the United States were $1.54 trillion. Of that, $539 billion was in bank deposits and another $344 billion was in foreign private portfolio investment in U.S. corporate stocks and bonds.

Foreign direct investment in U.S. companies, factories and real estate totaled $261.2 billion at the end of the year, a figure still dwarfed by $308.9 billion in American direct investment abroad.

Contrary to popular belief, the largest foreign investors in the United States are European, not Japanese. At the end of 1987, Britain was the largest direct investor with $75 billion, up from $56 billion the year before, followed by the Netherlands at $47 billion, up from $41 billion, and Japan at $33 billion, up from $27 billion.