Global| Dec 16 2005U.S. Current Account Deficit Improved Slightly
by:Tom Moeller
|in:Economy in Brief
Summary
The US current account deficit improved slightly last quarter to $195.8B but it was from a 2Q deficit that was revised deeper. Also lessening the economic significance of the improvement, it was entirely due to a narrower unilateral [...]
The US current account deficit improved slightly last quarter to $195.8B but it was from a 2Q deficit that was revised deeper. Also lessening the economic significance of the improvement, it was entirely due to a narrower unilateral transfers deficit caused by private transfers associated with hurricanes and homeland security.
The 3Q current account deficit amounted to 6.2% of GDP and is averaging 6.4% this year versus 5.7% in 2004. Consensus expectations had been for a deepening of the 3Q deficit to $204.6B.
The deficit in merchandise trade deteriorated to a record $197.9B from $186.9B in 2Q. Exports grew just 0.8% (10.0% y/y), held back by the damage to Gulf Coast port facilities caused by Hurricane Katrina. Imports, meanwhile, rose 3.1% (13.6% y/y) in large part due to the 17% surge in value of petroleum products.
The surplus on services improved for the fourth consecutive quarter to $15.1B and rose versus a surplus of $10.3B a year ago. Exports of services grew 1.9% (11.7% y/y and imports were roughly flat q/q (6.8% y/y).
From the capital account, net US foreign direct investment abroad was positive for the first time since 1982 while foreign direct investment in the US surged to its highest since 2001.
| US Int'l Balance of Payments | 3Q '05 | 2Q '05 | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Current Account Deficit | $195.8B | $197.8B | $167.0B | $668.1B | $519.7B | $475.2B |
| Goods/Services/Income Deficit | $182.3B | $175.1B | $151.2B | $587.1B | $448.5B | $411.2B |
| Exports | 2.6% | 3.6% | 13.9% | 14.9% | 6.8% | -3.7% |
| Imports | 3.0% | 3.0% | 15.8% | 18.1% | 7.3% | 1.6% |
| Unilateral Transfers Deficit | $13.5B | $22.6B | $20.5B | $80.9B | $71.2B | $64.0B |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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