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Economy in Brief

U.S. Current Account Deficit Narrowed in Q2'22
by Kathleen Stephansen, CBE  September 22, 2022

• Deficit narrowed by more than expected in Q2.

• The goods trade deficit narrowed. Goods exports posted a double-digit gain.

• The surplus on services trade narrowed slightly. Both travel exports and imports soared.

The U.S. current account deficit narrowed to $251.1 billion during Q2'22 from $282.5 billion in Q1'22, revised from $291.4 billion. The Action Economics Forecast Survey anticipated a $260.6 billion deficit. As a percent of GDP, the Q2 deficit contracted to 4.04% from 4.63% in Q1, revised from 4.78%. Exports overall rose 8.1% q/q (19.2% y/y) after a 2.4% gain, while imports rose 3.9% q/q (19.6% y/y) following a Q1 rise of 6.7%.

The deficit in goods trade narrowed to $310.5 billion after reaching a record of $341.7 billion, revised slightly from $342.2 billion. Exports jumped 10.7% (23.9% y/y) in Q2 from a 3.0% gain in Q1. Industrial supplies & materials exports rose 18.4% (43.5% y/y), while nonauto capital goods exports rose 1.6% (6.9% y/y). Automobile & parts exports rose 4.5% (11.9% y/y). Exports of foods, feeds & beverages jumped 13.5% (23.4% y/y) and consumer goods excluding food and autos rose 5.7% (19.6% y/y).

Imports of goods increased 2.5% (21.0% y/y) in Q2, following a 9.4% in Q1. As in Q1, the rise was led by a strong gain of 10.2% (39.4% y/y) in industrial supplies & materials imports, paced by rising oil prices. Nonauto consumer goods imports posted a small decline of 0.5% (+20.1% y/y) while auto imports rose 4.9% (14.2% y/y). Nonauto capital goods imports increased 0.7% (14.1% y/y) while food & beverage imports rose 5.0% (18.8% y/y).

The surplus on services trade narrowed slightly in Q2 to $57.1 billion from $58.9 billion in Q1, revised from $58.5 billion. Services exports rose 3.9% (15.7% y/y). Travel exports jumped 29.4% (110.9% y/y) as tourism strengthened. Services imports rose 6.5% (28.4% y/y) with a 33.8% jump (132.5% y/y) in travel imports. Charges for the use of intellectual property plummeted 24.5% (2.9% y/y).

The surplus on primary income widened to $43.6 billion in Q2 from $38.8 billion in Q1. Primary income receipts rose 7.6% (16.4% y/y). Primary income payments increased 6.8% (11.6% y/y).

On the capital flow side of the ledger, the net US acquisition of foreign financial assets dropped to $386.2 billion in Q2 from $414.6 billion in Q1. Direct investment assets declined to $99.1 billion from $134.0 billion in Q1.

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

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