U.S. Current Account Deficit Widens in Q4'20

• Goods trade deficit sets record in 2020.

• Services trade surplus declines to eight-year low.

The U.S. current account deficit deepened to $188.5 billion during Q4'20 following a widening to $181.0 billion in Q3'20, revised from $178.5 billion. The Action Economics Forecast Survey anticipated a $188.0 billion deficit. As a percent of GDP, the deficit grew slightly to 3.5%, it's deepest since Q4'08. During all of 2020, the current account deficit deepened to $647.2 billion from $480.2 billion.

The deficit in goods trade deteriorated to $253.0 billion as exports grew 8.7% (-5.8% y/y) in Q4. All export categories increased. Capital goods exports rose 5.7% (-12.9% y/y) and auto exports increased 4.8% (-3.9% y/y). Exports of nonauto consumer goods increased 8.9% (-1.7% y/y) while foods, feeds & beverage exports grew 15.1% (24.6% y/y). Imports of goods rose 6.0% (4.3% y/y) in Q4. The gain reflected a 12.8% increase (7.8% y/y) in auto imports and a 5.6% rise (4.0% y/y) in capital goods imports. Nonauto consumer goods import improved 6.1% (13.7% y/y) but foods, feeds & beverage imports eased 0.2% (+6.9% y/y).

The surplus on services trade narrowed to $53.0 billion in Q4. Services exports rose 2.3% (-24.0% y/y) as travel exports strengthened 18.2% (-73.5% y/y). Export charges for the use of intellectual property improved 4.2% (0.1% y/y). Imports of services strengthened 6.3% (-22.4% y/y), reflecting a 70.5% rise (-79.6% y/y) in travel imports in Q4. Imports of charges for the use of intellectual property increased 0.6% (-3.1% y/y).

The surplus on primary income rose to $47.9 billion after increasing sharply in Q3. Investment income receipts rose 3.0% (-12.2% y/y) while investment income payments increased 3.7% (-9.1% y/y). The deficit on secondary income narrowed slightly to $36.4 billion after deteriorating to a record $37.7 billion in Q3.

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

• Sales decline across the country.

• Median house prices ease.

Harsh winter weather throughout the country kept many potential home buyers indoors last month. Sales of new single-family homes declined 18.2% (+8.2% y/y) during February to 775,000 units from 948,000 in January, revised from 923,000. Earlier figures also were revised. The Action Economics Forecast Survey expected 879,000 sales in February.

Sales fell throughout the country. Midwest sales dropped 37.5% (+4.9% y/y) to 85,000, the lowest level since last June. In the West, sales weakened 16.4% (-8.1% y/y) to 194,000, down from last October's high of 277.000. Sales in South were off 14.7% (+20.2% y/y) to 458,000. Falling by 11.6% both m/m and y/y were sales in the Northeast to 38,000, well below a June 2020 high of 52,000.

The median price of a new home fell 1.1% (+5.3% y/y) in February to $349,400. Working 1.4% higher (7.7% y/y) to $416,000 was the average price of a new home. These prices are not seasonally adjusted.

The supply of new homes for sale in February rose to 4.8 months, up from 3.5 months in October. The median number of months a new home stayed on the market after completion declined to 3.2, after surging to 4.5 months in both August and September of last year.

New home sales activity and prices are available in Haver's USECON database. The consensus expectation figure from Action Economics is available in the AS1REPNA database.