Global| Dec 17 2008U.S. Current Account Deficit in 3Q'08 Narrowed
by:Tom Moeller
|in:Economy in Brief
Summary
The US current account deficit narrowed last quarter to $174.1 billion from a slightly revised $180.9 billion during 2Q. The 3Q deficit was shallower than the Consensus expectation for a reading of $179 billion. As a percentage of GDP [...]
The US current account deficit narrowed last quarter to $174.1 billion from a slightly revised $180.9 billion during 2Q. The 3Q deficit was shallower than the Consensus expectation for a reading of $179 billion.
As a percentage of GDP the deficit shrank to 4.8%, near the shallowest since 2004. It is reduced from the peak percentage reached late in 2005 of 6.6% of GDP.
The 3Q deficit on goods trade narrowed to $214.7 billion and it has been steady since 2005. Lower oil prices and a weaker U.S. economy held import growth to just 1.4%. Export growth also slowed sharply to 2.7% as foreign economies weakened as well. 
The balance on services trade grew to a record $38.2B. The lower dollar helped raise travel exports by 16.7% y/y while imports grew 4.8%. Passenger fare exports grew 29.6% y/y while imports rose 11.1%.
From the capital account, there was a small net inflow of funds of $9.5B versus a net outflow of $17.5B a year ago. The surplus is, however, down sharply from the peak. The deficit on U.S. private direct investment narrowed to it's least since early last year as U.S. investment grew but foreign investment fell.
The Credit Crunch of 2007-2008: A Discussion of the Background, Market Reactions, and Policy Responses from the Federal Reserve Bank of St. Louis is available here.
| US Balance of Payments SA | 3Q '08 | 2Q '08 | Year Ago | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Current Account Balance ($ Bil.) | -174.1 | -180.9 | -175.0 | -731.2 | -788.1 | -729.0 |
| Deficit % of GDP | -4.8 | -5.1 | -5.0 | -5.3 | -6.0 | -5.9 |
| Balance on Goods ($ Bil.) | -214.7 | -216.3 | -201.2 | -819.4 | -838.3 | -787.1 |
| Exports | 2.7% | 6.1% | 17.3% | 12.3% | 14.4% | 10.8% |
| Imports | 1.4% | 4.7% | 13.0% | 5.7% | 10.7% | 13.9% |
| Balance on Private Services ($ Bil.) | 38.2 | 36.2 | 33.1 | 119.1 | 85.0 | 75.6 |
| Exports | 3.1% | 3.3% | 10.2% | 14.6% | 11.5% | 10.2% |
| Imports | 2.4% | 2.0% | 8.4% | 8.4% | 11.3% | 7.7% |
| Balance on Income ($ Bil.) | 30.8 | 28.2 | 23.0 | 81.8 | 57.2 | 67.2 |
| Unilateral Transfers ($ Bil.) | -28.4 | -29.0 | -27.8 | -112.7 | -92.0 | -89.8 |
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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