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Economy in Brief

U.S. Current Account Deficit Deeper: Oil Imports Surged
by Tom Moeller September 18, 2006

The US current account deficit in 2Q'06 deepened to $218.4B versus a revised and deepened deficit of $213.2B during 1Q. The deficit last quarter equaled 6.6% of GDP, greater than the 6.35% during all of last year .

Consensus expectations had been for a 2Q deficit of $213.0B.

The deficit in merchandise trade deteriorated to $210.6B versus $208.0 during 1Q. Exports grew 3.4% (13.6% y/y) although that strong gain was offset by a 2.4% gain in imports (12.8% y/y). Higher oil prices last quarter caused the value of crude oil imports to surge 20.0% (34.7% y/y).

The surplus in services trade remained about unchanged at $16.8B. Exports of services grew 3.1% (9.5% y/y) while imports grew 3.8% (10.7% y/y).

From the capital account, net US foreign direct investment abroad improved modestly to 47.1B, a still-reduced figure versus last year. Foreign direct investment in the US, however, rose again to $48.4B.

Going Global: The Changing Pattern of U.S. Investment Abroad from the Federal Reserve Bank of Kansas City is available here.

US Int'l Balance of Payments 2Q '06 1Q '06 Y/Y 2005 2004 2003
Current Account Deficit $218.4 $213.2B $193.3B (2Q'05) $791.5B $665.3B $527.5B
  Goods/Services/Income Deficit $198.0 $193.7B $170.1B $705.4B $583.7B $458.3B
    Exports 5.3% 4.8% 18.8% 14.6% 15.7% 5.9%
    Imports 4.4% 2.8% 18.1% 16.3% 18.7% 7.4%
  Unilateral Transfers Deficit $20.4B $19.5B $23.2B (2Q'05) $86.1B $81.6B $69.2B
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