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Economy in Brief

U.S. Current Account Deficit Deepens to Record in Q1'22
by Tom Moeller  June 23, 2022

• Deficit is greater-than-expected.

• Goods deficit widened to another record.

• Services surplus shrinks.

The U.S. current account deficit deepened to $291.4 billion during Q1'22 from $224.8 billion in Q4'21, revised from $217.9 billion. Data back to 2017 was revised. The Action Economics Forecast Survey anticipated a $279.0 billion deficit. As a percent of GDP, the Q1 deficit deepened to 4.78% from 3.75% in Q4 (revised from 3.63%). Exports overall grew 2.6% (14.4% y/y) after a 5.1% gain while imports surged 7.5% (21.4% y/y) following a 4.0% Q4 rise.

The deficit in goods trade rose to a new record $342.2 billion last quarter from $285.0 billion in Q4, revised from $283.4 billion. Exports grew 2.9% (18.8% y/y) following a 7.2% gain. Industrial supplies & materials exports rose 7.7% (36.2% y/y) while capital goods exports rose 2.9% (12.4% y/y). Automobile & parts exports gained 1.2% (0.3% y/y). Exports of foods, feeds & beverages edged 0.5% higher (6.9% y/y) but consumer goods excluding food and autos fell 5.9% (+23.8% y/y).

Imports of goods increased 9.4% (22.8% y/y) following a 6.2% increase. The rise was led by a 9.2% gain (44.1% y/y) in industrial supplies & materials imports, paced by rising oil prices. Nonauto consumer goods imports strengthened 12.8% (20.5% y/y) while auto imports rose 9.7% (4.7% y/y). Capital goods imports increased 7.9% (17.4% y/y) while food & beverage imports rose 7.5% (25.0% y/y).

The surplus on services trade declined in Q1 to $58.5 billion from $60.0 billion in Q4, revised from $54.4 billion. Services exports rose 2.0% (15.6% y/y). Travel exports rose 5.2% (88.3% y/y) as tourism strengthened. Services imports improved 3.8% (32.4% y/y) with a 2.0% gain (154.7% y/y) in travel imports. Charges for the use of intellectual property jumped 26.5% (40.8% y/y).

The surplus on primary income narrowed to $33.4 billion in Q1 from $37.0 billion in Q4. Primary income receipts rose 2.6% (9.0% y/y). Primary income payments increased 4.6% (14.2% y/y).

On the capital flow side of the ledger, the net US acquisition of foreign financial assets surged to $343.1 billion in Q1 from $49.4 billion in Q4. Direct investment assets surged to $115.2 billion from $64.9 billion in Q4.

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

Semiannual Monetary Policy Report to the Congress by Fed Chair Jerome H. Powell is available here.

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