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Economy in Brief

U.S. Current Account Deficit Widens Again
by Carol Stone  June 18, 2015

The current account deficit was $113.3 billion in Q1, following $103.1 billion in Q4 2014 and compares to $96.4 billion in Q1 a year ago. All these data are affected by annual revisions, and all are seasonally adjusted. The widening in the latest period came from a bigger deficit in goods trade and a smaller surplus on primary income. In contrast, the balance on services improved a bit and the deficit in secondary income narrowed slightly. The current account result was more favorable than the Action Economics Forecast Survey, which had expected a deficit of $117.5 billion.

The deficit on goods was $189.0 billion in Q1 after $186.0 billion in Q4. Both exports and imports dropped markedly, exports by 6.5% (-4.7% y/y) and imports by 3.9% (-2.4% y/y). Most types of exports participated in the decline, and most indeed showed sizable drops. Some can be attributed to the fall in petroleum prices, but a number of other goods exports also decreased noticeably. Among imports, the drop was more than accounted for by petroleum, which fell $25.4 billion from Q4, as the total went down $23.4 billion.

The trade surplus on services increased to $58.7 billion in Q1 from a slightly revised $57.6 billion in Q4. Exports of services gained 1.0% (3.3% y/y), while imports of services edged up 0.5% (5.1% y/y). Among services exports, spending on "other business services" increased notably, and travel increased somewhat. Other categories were little changed. On the import side, the largest increase was in transport, with only modest moves among other types of services.

The surplus on primary income fell sharply to $50.6 billion in Q1 from an upwardly revised $60.0 billion in Q4. Direct investment income plunged to $109.5 billion from $118.6 billion; portfolio income was down moderately. The overall primary income surplus was also held down by an increase in portfolio income payments to foreign investors, although a decrease in direct investment income payments was partially offsetting. The deficit on secondary income, that is, transfer payments, narrowed a bit to $33.8 billion in Q1 from 34.8 billion in Q4, as payments rose slightly more than receipts.

From the financial account, private direct investment abroad was $75. 6 billion in Q1 after its surge to $112.5 billion in Q4. Portfolio investment surged this time, to $230.2 billion after slowing to $81.1 billion in Q4. Foreign direct investment into the U.S. was very large, at $186.2 billion, compared to just $50.5 billion in Q4 and a net reduction of $105.4 billion a year ago. Portfolio investments in the U.S. diminished to $100.8 billion from $133.0 billion in Q4.

Balance of Payments data are in Haver's USINT database, with summaries available in USECON. The expectations figure is in the AS1REPNA database.

US Balance of Payments SA* Q1'15 Q4'14 Q3'14 Y/Y** 2014 2013 2012
Current Account Balance ($ Billion) -113.3 -103.1 -97.9 -96.4 -389.5 -376.8 -449.7
  Deficit % of GDP -2.6 -2.3 -2.2 -2.3% -2.2% -2.2% -2.8%
 Balance on Goods ($ Billion) -189.0 -186.0 -183.1 -184.3 -741.5 -702.6 -741.1
  Exports -6.5% -0.9% 0.9% -4.7% 2.5% 1.9% 4.2%
  Imports -3.9% -0.2% -0.2% -2.4% 3.5% -0.4% 2.9%
 Balance on Services ($ Billion) 58.7 57.6 57.2 58.9 233.1 224.2 204.4
  Exports 1.0% 2.0% -1.3% 3.3% 3.3% 4.8% 4.6%
  Imports 0.5% 2.6% -0.2% 5.1% 3.0% 2.6% 3.7%
 Balance on Primary Income ($ Billion) 50.8 60.0 61.7 58.2 238.0 224.5 212.2
 Balance on Secondary Income ($ Billion) -33.8 -34.8 -33.8 -29.3 -119.2 -122.9 -125.1
*All data affected by annual revisions. **Balances are for Q1 2014.
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