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Economy in Brief

U.S. Current Account Deficit Narrows Slightly in Q3
by Gerald D. Cohen  December 19, 2019

The U.S. current account deficit narrowed less than expected to $124.1 billion during Q3'19 from a downwardly-revised $125.2 bil. in Q2'19 (was $128.2 bil.). The Action Economics Forecast Survey anticipated a $122.1 bil. deficit. As a percent of GDP, the deficit declined to 2.3% from an unrevised 2.4% in Q2, and a six-and-a-half year high 2.8% in Q4'2018.

The smaller deficit last quarter was the result of a $3.7 bil. decrease in the goods deficit, which was somewhat offset by a $1.9 bil. decline in the service surplus and a $0.6 bil. deterioration in the income surplus. Both goods exports and imports were down 0.2% and 0.7% respectively (-1.4% and -2.2% y/y). Four out of the seven major categories of goods trade improved, led by $3.5 and $2.4 bil. narrowing in the industrial supplies and vehicles balances. Meanwhile, the consumer goods deficit increased by $2.3 bil.

Services exports edged down 0.1% in Q3 (+2.6% y/y) while imports rose 1.1% (5.3% y/y). Five of the nine major services categories showed a worsening trade balance led by a $0.7 declines in both travel and intellectual property services surpluses.

The surplus on primary income increased to a record high $68.7 bil., though as a share of GDP it has hovered around 0.3% since 2012. Despite higher interest rates in the U.S. versus much of the rest of the world, the investment income balance rose to a record $72.1 bil. -- it has also been range-bound around 0.3% of GDP since 2012. The deficit on secondary income increased to $35.5 bil. near Q1's record $36.6 bil.

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 Q3'19 Q2'19 Q1'19 2018 2017 2016
Current Account Balance ($ Billion) -124.1 -125.2 -136.2 -491.0 -439.6 -428.3
  Deficit % of GDP -2.3 -2.4 -2.6 2.4 2.3 2.3
 Balance on Goods ($ Billion) -219.6 -223.2 -216.7 -887.3 -805.2 -749.8
  Exports (% Chg) -0.2 -1.1 0.5 7.8 6.6 -3.6
  Imports (% Chg) -0.7 0.3 -2.1 8.6 6.9 -2.9
 Balance on Services ($ Billion) 62.2 64.1 60.3 259.7 255.1 246.8
  Exports (% Chg) -0.1 2.1 0.5 3.5 5.3 0.4
  Imports (% Chg) 1.1 0.4 1.4 4.3 6.3 4.0
 Balance on Primary Income ($ Billion) 68.7 66.6 56.9 254.0 225.8 198.7
 Balance on Secondary Income ($ Billion) -35.5 -32.7 -36.6 -117.3 -115.3 -124.0
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