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Economy in Brief

U.S. Current Account Deficit Another Record
by Tom Moeller March 16, 2005

The US current account deficit deepened in 4Q04 to a record $187.9B. Consensus expectations had been for a deficit of $183.0B. The figure pulled the full year deficit to $665.9B, 5.7% of GDP.

The deficit in merchandise trade deteriorated to $183.5B from a revised $167.0B in 3Q. Import growth of 5.4% (20.2% y/y) easily surpassed the strength of exports which grew 1.7% (11.6% y/y).

The surplus on services improved slightly to $12.5B from $11.2B in 3Q. The annual surplus of $48.4B in services trade was, however, barely half the peak in 1997 of $89.9B. Exports of services grew 2.6% in 4Q (7.2% y/y and imports rose 1.2% (10.9% y/y).

From the capital account, US foreign direct investment abroad surged to $101.3B, nearly double the 4Q03 level, and foreign direct investment in the US rose 1.3% to $36.3B, more than triple the 4Q03 level. The deficit of $65B pulled the full year deficit to $133B, about the same as during 2003.

Federal Reserve Board Governor Ben S. Bernanke's speech titled The Global Saving Glut and the U.S. Current Account Deficit can be found here.

US Int'l Balance of Payments 4Q '04 3Q '04 Y/Y 2004 2003 2002
Current Account Deficit $187.9B $165.9B $127.0B $665.9B $530.7B $473.9B
  Goods/Services/Income Deficit $168.9B $151.0B $109.3B $593.0B $463.2B $414.6B
    Exports 4.6% 2.7% 13.6% 15.3% 5.8% -3.9%
    Imports 6.6% 2.8% 23.3% 18.6% 7.3% 1.5%
  Unilateral Transfers Deficit $19.0B $14.9B $17.6B $72.9B $67.4B $59.4B
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