Global| Mar 17 2008U.S. Current Account Deficit Shrank in 2007
by:Tom Moeller
|in:Economy in Brief
Summary
The US current account deficit fell last quarter to $172.9 billion from $177.4 billion in Q3. The Q4 deficit was shallower than Consensus expectations for a deficit of $184 billion. The latest deficit totaled 4.9% of GDP and it peaked [...]
The US current account deficit fell last quarter to $172.9 billion from $177.4 billion in Q3. The Q4 deficit was shallower than Consensus expectations for a deficit of $184 billion.
The latest deficit totaled 4.9% of GDP and it peaked as a percentage of GDP nearly two years ago at 6.8% in Q4 2005.
That shrinkage occurred even though the deficit on merchandise trade deepened. Higher oil prices lifted imports and the goods deficit grew to $208.1B from Q3's revised deficit of $200.5B. It was the deepest deficit in just over a year. During the last year only, however, exports grew 14.2% and outpaced import growth of 9.8%.
The effects of the lower U.S. dollar and the strength of foreign economies versus the U.S. is apparent greatest in the surplus in services trade which grew to a record surplus of $30.2B from $28.0B in 3Q. Exports of services during the last year grew 15.2%. Travel exports grew 21.4% y/y and passenger fares were up 19.2%. Imports grew a slower 11.5% due to moderate 7.3% growth in travel and 9.3% growth in passenger fares.
The trade surplus on earned income grew to $33.0B as the unilateral transfers deficit deepened to 28.1B.
Friedman and Taylor on Monetary Policy Rules: A Comparison from the Federal Reserve Bank of St. Louis is available here.
| US Balance of Payments, Bil.$, SA | 4Q '07 | Q3 '07 | Year Ago | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Current Account Balance ($ Bil.) | -172.9 | -177.4 | -187.9 | -738.6 | -811.5 | -754.8 |
| Deficit % of GDP | -4.9 | -5.1 | -5.6 | -5.3 | -6.2 | -6.1 |
| Balance on Goods ($ Bil.) | -208.1 | -200.5 | -200.3 | -815.4 | -838.3 | -787.1 |
| Exports | 2.4% | 6.7% | 14.2% | 12.3% | 14.4% | 10.8% |
| Imports | 2.9% | 2.9% | 9.8% | 5.5% | 10.7% | 12.9% |
| Balance on Private Services ($ Bil.) | 30.2 | 28.0 | 23.4 | 106.9 | 79.8 | 72.8 |
| Exports | 4.4% | 4.9% | 15.2% | 13.4% | 8.8% | 11.1% |
| Imports | 3.4% | 3.7% | 11.5% | 8.6% | 9.3% | 8.7% |
| Balance on Income ($ Bil.) | 33.0 | 21.3 | 9.7 | 74.3 | 36.6 | 48.1 |
| Unilateral Transfers ($ Bil.) | -28.1 | -26.2 | -20.7 | -104.4 | -89.6 | -88.5 |
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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