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Economy in Brief

U.S. Current Account Deficit Continued to Widen in Q2
by Peter D'Antonio  September 21, 2021

• The current account deficit has widened sharply during the pandemic.

• Year-to-year export and import figures reflect basis effects from the lockdowns.

The U.S. current account deficit widened slightly to $190.3 last quarter from $189.4 billion in Q1, revised from $195.7 billion. The Action Economics Forecast Survey anticipated a $190.0 billion deficit. As a percent of GDP, the deficit actually edged up to 3.35%, after reaching a 13-year low. The current account deficit has widened every quarter since the pandemic began.

The deficit in goods trade deteriorated to a record $269.7 billion as exports grew 6.9% (50.7% y/y) in Q2. Industrial supplies & materials exports rose 13.4% (65.0% y/y), capital goods exports increased 7.8% (32.4% y/y), and nonauto consumer goods rose 9.5% (57.6% y/y). Autos, parts and engines exports fell by 6.8% (127.4% y/y) while food, feeds and beverages slipped by 0.6% (25.1% y/y). Imports of goods rose 4.3% (37.7% y/y) in Q2. The gain mainly reflected a 15.1% rise (72.9% y/y) in industrial supplies and materials imports as oil prices rose. Capital goods imports strengthened 3.7% (29.5% y/y) while foods, feeds and beverage imports rose 12.1% (25.2% y/y). Auto and parts imports fell by 3.8% (111.4% y/y), while nonauto consumer goods edged down by 0.3% (33.4% y/y). The sharp gains in the year-to-year figures reflect basis effects, as both exports and imports collapsed during the pandemic lockdowns.

The surplus on services trade narrowed to $61.2 billion in Q2, down from $62.8 billion the previous quarter, revised from $55.7 billion. Services exports rose 4.2% (14.4% y/y) as travel exports strengthened 21.8% (16.1% y/y). Export charges for the use of intellectual property rose 3.5% (15.6% y/y). Imports of services improved 7.7% (27.2% y/y), reflecting a 49.9% rise (396.3% y/y) in travel imports. Imports charges for the use of intellectual property dipped by 4.5% (25.0% y/y).

The surplus on primary income fell to $49.1 billion in Q2. Investment income receipts rose 2.9% (27.6% y/y) while investment income payments increased 4.1% (24.8% y/y). The deficit on secondary income narrowed to $31.0 billion.

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

U.S. Balance of Payments SA Q2'21 Q1'21 Q4'20 2020 2019 2018
Current Account Balance ($ Billion) -190.3 -189.4 -175.1 -616.1 -472.1 -438.2
  As % of GDP -3.35 -3.44 -3.26 -2.95 -2.21 -2.13
 Balance on Goods ($ Billion) -269.7 -268.9 -253.1 -922.0 -861.5 -878.7
  Exports (% Chg) 6.9 6.3 7.6 -13.5 -1.5 7.7
  Imports (% Chg) 4.3 6.3 5.8 -6.5 -1.6 8.5
 Balance on Services ($ Billion) 61.2 62.8 56.3 245.3 285.2 297.8
  Exports (% Chg) 4.2 3.8 5.0 -19.5 1.7 3.4
  Imports (% Chg) 7.7 0.2 9.5 -22.1 4.8 3.1
 Balance on Primary Income ($ Billion) 49.1 50.2 54.2 188.5 231.9 259.1
 Balance on Secondary Income ($ Billion) -31.0 -33.5 -32.5 -127.9 -127.7 -116.4
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