The BEA released the end-2007 International Investment Position data on June 27. Several observations: As in recent years, the NIIP to GDP ratio continues to deteriorate. However, the NIIP to GDP ratio as of end-2007 is improved relative to the originally reported end-2006 NIIP/GDP ratio. In the last year, the dollar change in the NIIP deviates substantially (i.e., is more positive) than the corresponding current account reported on a NIPA basis. This repeats the pattern from the previous five years. Interestingly, 2005 stands out by far as an outlier, wherein the the NIIP improves while the CA is in substantial deficit. There appears to be a measurable correlation between dollar depreciation against other major currencies and the deviation between change in NIIP and CA. The first two observations are illustrated in Figure 1. Figure 1: Net international investment position to GDP ratio, 2007 release (blue), ...

Article Source: Nonresidential investment has been increasing until 2008Q1, at which time it essentially stalled (-0.2 ppts. annualized in log terms). On the basis of past historical correlations, what's in store? Figure 1: Four quarter growth rate in nonresidential investment (blue) and residential investment (red) lagged one year, calculated as four quarter log difference. Source: BEA GDP release of 29 May 2008, NBER, and author's calculations.Figure 1 depicts the time series for year-on-year nonresidential investment growth, and residential investment growth lagged four quarters. There's an obvious correlation, but clearly it's not a particularly strong one. There are periods where business fixed investment levitates above residential growth, such as the latter part of the 1980s (due to the dollar's depreciation), and during the 1990s, as well as the most recent few quarters. The relationship ...