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Economy in Brief

U.S. Current Account Deficit Deepens
by Tom Moeller  December 19, 2018

The U.S. current account deficit widened to $124.8 billion during Q3'18 from $101.2 billion in Q2. It was the largest quarterly deficit since Q4'08 and compared to $123.4 billion expected in the Action Economics Forecast Survey. As a percent of GDP, the deficit deepened to 2.4% from 2.0% in Q2.

The larger deficit last quarter was due to a record $227.0 billion shortfall on goods trade. Goods exports declined 1.8% (+8.8% y/y), while goods imports increased 2.6% (11.0% y/y). It was the first quarterly decline in goods exports since Q4'16.

The surplus on services trade held fairly steady at a record $68.4 billion. Services exports rose 0.9% after a slight decline. Telecommunications, computer & information services exports gained 1.7% (0.7% y/y) after a 2.6% shortfall. Exports of intellectual property rights rebounded 1.9% (2.3% y/y) after declining 3.5% while travel exports improved a steady 0.3% (1.6% y/y). Services imports gained 1.4%, following two quarters of decline. Charges for intellectual property rebounded 1.8% (1.1% y/y) after a 6.3% decline and travel imports increased 1.5% (6.9% y/y). Telecommunications, computer & information services imports rose 0.4% (-1.9% y/y) following two consecutive quarters of decline.

The surplus on primary income narrowed to $59.4 billion, off modestly versus the record high reached in Q4'17. The deficit on secondary income narrowed significantly to $25.6 billion and was the smallest since Q2'15.

From the capital account, the balance on foreign direct investment improved to a surplus of $76.8 billion following two quarters of deficit, which were unprecedented. Surpluses have been the norm.

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 Q3'18 Q2'18 Q1'18 2017 2016 2015
Current Account Balance ($ Billion) -124.8 -101.2 -121.7 -449.1 -432.9 -409.8
  Deficit % of GDP -2.4 -2.0 -2.4 -2.3 -2.3 -2.2
 Balance on Goods ($ Billion) -227.0 -203.1 -220.8 -807.5 -751.1 -761.9
  Exports -1.8% 4.4% 2.4% 6.6% -3.6% -7.6%
  Imports 2.6% 0.0% 2.9% 6.9% -2.9% -4.7%
 Balance on Services ($ Billion) 68.4 68.5 66.8 255.2 249.1 263.3
  Exports 0.9% -0.1% 1.0% 5.1% 0.5% 1.9%
  Imports 1.4% -1.3% -0.2% 6.4% 3.6% 2.3%
 Balance on Primary Income ($ Billion) 59.4 62.3 61.2 221.7 193.0 203.6
 Balance on Secondary Income ($ Billion) -25.6 -29.0 -28.9 -118.6 -123.9 -112.8
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