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Economy in Brief

U.S. Current Account Deficit Another Record
by Tom Moeller June 17, 2005

The 1Q05 US current account deficit deepened to another record of $195.1B, or 6.4% of GDP. Consensus expectations had been for a deficit of $189.0B. Trade account deterioration was estimated to have subtracted 0.7 percentage points from 1Q growth in real GDP, an estimate which may be increased. Earlier estimates of the current account deficit were deepened slightly for 2004.

The deficit in merchandise trade deteriorated to $186.3B from a revised $182.2B in 4Q. Exports grew 2.4% (10.3% y/y) and imports rose 2.3% (15.9% y/y).

The surplus on services improved for the second consecutive quarter to $14.6B, the highest level since 4Q03 but remained down from the annual peak in 1997 of $89.8B. Exports of services grew 4.3% in 1Q (12.7% y/y and imports rose 2.9% (12.1% y/y).

From the capital account, US foreign direct investment abroad dropped sharply to $32.2B following a 4Q surge while foreign direct investment in the US slipped to $28.8B.

US Int'l Balance of Payments 1Q '05 4Q '04 Y/Y 2004 2003 2002
Current Account Deficit $195.1B $188.4B $146.1B $668.1B $519.7B $475.2B
  Goods/Services/Income Deficit $168.0B $166.0B $123.8B $587.1B $448.5B $411.2B
    Exports 2.1% 5.0% 13.8% 14.9% 6.8% -3.7%
    Imports 1.9% 6.3% 19.4% 18.1% 7.3% 1.6%
  Unilateral Transfers Deficit $27.1B $22.4B $22.3B $80.9B $71.2B $64.0B
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