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Economy in Brief

U.S. Current Account Deficit Improved
by Tom Moeller September 16, 2005

The US current account deficit improved last quarter but it was from a 1Q record that was revised deeper. The 2Q deficit of $195.7B amounted to 6.3% of GDP. Consensus expectations had been for greater improvement to $193.0B.

The deficit in merchandise trade deteriorated to $186.9B from an unrevised $186.3B in 1Q. Exports grew 4.5% (11.7% y/y) and imports rose 2.6% (12.7% y/y).

The surplus on services improved for the third consecutive quarter to $13.6B from a downwardly revised 1Q surplus. Exports of services grew 1.2% (10.3% y/y and imports rose 1.0% (9.7% y/y).

From the capital account, US foreign direct investment abroad fell to $33.6B from an upwardly revised 1Q and foreign direct investment in the US nearly halved q/q to $17.6B.

Unwinding the Current Account Deficit from the Federal Reserve Bank of St. Louis can be found here.

US Int'l Balance of Payments 2Q '05 1Q '05 Y/Y 2004 2003 2002
Current Account Deficit $195.7B $198.7B $166.6B $668.1B $519.7B $475.2B
  Goods/Services/Income Deficit $173.8B $172.4B $146.1B $587.1B $448.5B $411.2B
    Exports 4.2% 2.1% 14.4% 14.9% 6.8% -3.7%
    Imports 3.2% 2.6% 15.6% 18.1% 7.3% 1.6%
  Unilateral Transfers Deficit $21.9B $26.3B $20.5B $80.9B $71.2B $64.0B
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