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Economy in Brief

U.S. Current Account Deficit By Far a Record
by Tom Moeller March 14, 2006

The US current account deficit surged last quarter to $224.9B from the revised 3Q deficit $185.4B. Last year, the current account deficit of $804.9B jumped $136.9B from 2004 to a new record and equaled 6.4% of GDP.

Consensus expectations had been for a 4Q deficit of $220.0B.

The deficit in merchandise trade deteriorated to a record $212.4B from $197.3B in 3Q. Exports jumped 2.9% (10.7% y/y) in a recovery from the modest 0.8% 3Q increase which was restrained by the damage to Gulf Coast port facilities caused by Hurricane Katrina.

Imports surged 5.1% (13.5% y/y) as petroleum imports rose another 9.1% (37.1% y/y). Imports of non-petroleum products were, however, also strong and rose 4.4% (9.7% y/y).

The surplus on services fell slightly to $15.1B from an upwardly revised $15.9B surplus during 3Q. Exports of services grew 0.6% (7.5% y/y) and 10.4% for the full year. Imports grew 1.7% q/q (6.1% y/y).

From the capital account, net US foreign direct investment abroad was positive for the second consecutive quarter and foreign assets in the US fell from the 3Q high.

US Int'l Balance of Payments 4Q '05 3Q '05 Y/Y 2005 2004 2003
Current Account Deficit $224.9B $185.4B $188.4B (4Q04) $804.9B $668.1B $519.7B
  Goods/Services/Income Deficit $199.8B $176.5B $166.0B $722.1B $587.1B $448.5B
    Exports 3.6% 3.2% 13.1% 13.7% 14.9% 6.8%
    Imports 6.4% 2.7% 15.2% 16.3% 18.1% 7.3%
  Unilateral Transfers Deficit $25.1BB $9.0B $22.4B $82.9B $80.9B $71.2B
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