On This PageMay 2004, No. 202

How Worrisome is the U.S. Net Foreign Debt Position?
Last Updated: 04/15/04

 The sizable inflows of capital to the U.S. from abroad in recent years have raised
concerns about the potential impact on the U.S. economy if the tide were to turn.
This article argues that the rapid accumulation of U.S. net foreign debt is tied to
permanent rather than temporary changes in the relative return on U.S. assets, so in
the absence of any other shocks to the global economy, a capital outflow is unlikely.