What a nice surprise this morning. I looked at the latest current account data, and discovered, lo and behold, that in the first quarter the U.S. earned more money on its foreign investments than foreigners earned on their investments in the U.S.

Not bad for the world's biggest debtor, eh?

Especially since all of the pessimists, like Brad Setser (hi Brad!) expected the U.S. to go into permanent deficit on the investment account. Here's what Brad had to say:

But the big gains came from foreign direct investment. The earnings of US firms abroad increased by $2.6b in the first quarter (v. q4). But even more importantly, the earnings for foreign firms fell by $3.7b. The net swing was $6.3b or so -- overwhelming the US interest bill.

Dark matter (though not from Disney)?

Continued gains from the export of US intangibles (just not by Disney)?

Or bad data?

The implied return on foreign direct investment in the US remains very low -- too low, in my view, to be plausible. Toyota must have had a good quarter ... to me, that suggest bad data.

Hey Brad, I think there's bad data too...I just disagree with you on where it is. I think U.S. companies are making a lot of overseas investment in intangibles--including training and business-know--which are simply not being tracked by the published data.

And you know what...I've got a pretty good long-term track record in finding the real story underneath the official data, going back to the boom and bust of the 1990s.

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