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Economy in Brief

U.S. Current Account Deficit Deepens Significantly in Q2
by Tom Moeller  September 18, 2020

• Current account deficit grows as exports & imports decline.

• Goods & services balances both deteriorate.

The U.S. current account deficit grew to $170.5 billion in Q2 2020 from $111.5 billion in Q1, revised from $104.2 billion. The Action Economics Forecast Survey anticipated a $159.0 billion deficit. As a percent of GDP, the deficit grew to 3.5%, it's deepest since Q4 2008.

The deficit in goods trade deteriorated to $219.3 billion as exports fell 28.4% (-29.7 y/y). All export categories realized significant declines led by a 58.9% drop (-61.6% y/y) in auto exports. Imports of goods also were off a sharp 14.6% (-20.0% y/y). Goods import declines were widespread with the largest being a 53.3% shortfall (-57.4% y/y) in auto imports.

Services exports declined 22.9% (-29.3% y/y) as travel exports weakened by two-thirds (-72.9% y/y). Export charges for the use of intellectual property fell 9.6% (-12.4% y/y. Imports of services weakened 25.9% (-31.5% y/y) reflecting an 89.7% drop (-92.6% y/y) in travel imports. Imports of charges for the use of intellectual property fell 12.8% (-6.6% y/y).

The surplus on primary income fell to $29.2 billion, the smallest since Q2 2009. Investment income receipts declined 18.4% (-27.3% y/y) while investment income payments weakened 11.7% (-21.0% y/y). The deficit on secondary income lessened slightly to $34.9 billion from its record $37.1 billion in Q1.

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 Q2'20 Q1'20 Q4'19 2019 2018 2017
Current Account Balance ($ Billion) -170.5 -111.5 -104.3 -480.2 -449.7 -365.3
  Deficit % of GDP -3.5 -2.1 -1.9 -2.2 -2.2 -1.9
 Balance on Goods ($ Billion) -219.3 -191.7 -202.5 -864.3 -880.3 -799.3
  Exports (% Chg) -28.4 -1.9 0.1 -1.5 7.7 6.8
  Imports (% Chg) -14.6 -3.0 -2.9 -1.6 8.5 6.8
 Balance on Services ($ Billion) 54.4 65.3 72.7 287.5 300.4 285.6
  Exports (% Chg) -22.9 -8.6 0.8 1.6 3.9 6.4
  Imports (% Chg) -25.9 -7.8 0.4 4.7 3.2 6.4
 Balance on Primary Income ($ Billion) 29.2 52.0 62.0 236.3 251.2 257.8
 Balance on Secondary Income ($ Billion) -34.9 -37.1 -36.5 -139.7 -120.9 -109.3
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