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Economy in Brief

U.S. Current Account Deficit Deepens Further in Q3
by Tom Moeller  December 21, 2021

• Deficit is largest in 15 years.

• Goods & services balances both deteriorate.

The U.S. current account deficit widened to $214.8 billion in Q3'21 from $198.3 billion in Q2'21, revised from $190.3 billion. It was the deepest deficit since Q3 2006. The Action Economics Forecast Survey anticipated a $203.7 billion deficit. As a percent of GDP, the deficit rose to 3.71%, the deepest since Q4 2005 when it was 6.29% of GDP.

The deficit in goods trade rose to a record $274.8 billion as exports grew 1.1% (23.8% y/y) in Q3. Industrial supplies & materials exports increased 3.9% (46.1% y/y) and nonauto consumer goods rose 9.0% (28.5% y/y). Food, feeds and beverages exports declined 8.5% (+6.5% y/y), autos, parts and engines exports fell 1.4% (-5.7% y/y) and capital goods exports eased 0.7% (+16.8% y/y). Imports of goods rose 1.4% (19.0% y/y) in Q3. Imports of industrial supplies and materials increased 8.0% (63.3% y/y) as oil prices rose. Foods, feeds and beverage imports rose 2.7% (19.6% y/y) while capital goods imports strengthened 1.2% (16.7% y/y). Auto and parts imports fell 4.1% (-1.8% y/y) while nonauto consumer goods declined 1.8% (+11.5% y/y).

The surplus on services trade deteriorated sharply to $49.9 billion in Q3, the smallest surplus since Q4'11 and down from the peak $78.9 billion surplus in Q1'18. Services exports eased slightly (+14.7% y/y). Travel exports increased 1.6% (54.8% y/y) but export charges for the use of intellectual property declined 5.8% (+2.7% y/y). Imports of services improved 9.8% (30.3% y/y), reflecting a 47.3% rise (379.3% y/y) in travel imports. Import charges for the use of intellectual property increased 8.2% (6.6% y/y).

The surplus on primary income rose to $48.2 billion in Q3. Investment income receipts rose 6.8% (17.4% y/y) while investment income payments increased 3.7% (21.8% y/y). The deficit on secondary income deepened to $38.0 billion.

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

A Hopeless and Imperative Endeavor: Lessons from the Pandemic for Economic Forecasters by Fed Governor Christopher J. Waller is available here.

U.S. Balance of Payments SA Q3'21 Q2'21 Q1'21 2020 2019 2018
Current Account Balance ($ Billion) -214.8 -198.3 -189.4 -616.1 -472.1 -438.2
  As % of GDP -3.71 -3.49 -3.44 -2.95 -2.21 -2.13
 Balance on Goods ($ Billion) -274.8 -269.6 -268.9 -922.0 -861.5 -878.7
  Exports (% Chg) 1.1 7.0 6.3 -13.5 -1.5 7.7
  Imports (% Chg) 1.4 4.3 6.3 -6.5 -1.6 8.5
 Balance on Services ($ Billion) 49.9 62.6 62.8 245.3 285.2 297.8
  Exports (% Chg) -0.0 5.2 3.8 -19.5 1.7 3.4
  Imports (% Chg) 9.8 8.1 0.2 -22.1 4.8 3.1
 Balance on Primary Income ($ Billion) 48.2 38.8 50.2 188.5 231.9 259.1
 Balance on Secondary Income ($ Billion) -38.0 -30.1 -33.5 -127.9 -127.7 -116.4
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