The US current account deficit deepened in 4Q04 to a record $187.9B. Consensus expectations had been for a deficit of $183.0B. The figure pulled the full year deficit to $665.9B, 5.7% of GDP.

The deficit in merchandise trade deteriorated to $183.5B from a revised $167.0B in 3Q. Import growth of 5.4% (20.2% y/y) easily surpassed the strength of exports which grew 1.7% (11.6% y/y).

The surplus on services improved slightly to $12.5B from $11.2B in 3Q. The annual surplus of $48.4B in services trade was, however, barely half the peak in 1997 of $89.9B. Exports of services grew 2.6% in 4Q (7.2% y/y and imports rose 1.2% (10.9% y/y).

From the capital account, US foreign direct investment abroad surged to $101.3B, nearly double the 4Q03 level, and foreign direct investment in the US rose 1.3% to $36.3B, more than triple the 4Q03 level. The deficit of $65B pulled the full year deficit to $133B, about the same as during 2003.

Federal Reserve Board Governor Ben S. Bernanke's speech titled The Global Saving Glut and the U.S. Current Account Deficit can be found here.