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Economy in Brief

U.S. Current Account Deficit Widened in First Quarter
by Sandy Batten  June 16, 2016

The U.S. current account deficit widened to $124.7 billion in the first quarter of 2016 from a revised $113.4 billion deficit in the fourth quarter of 2015 (originally -$125.3 billion). The Q1 figure was in line with the expectation from Action Economics Forecast Survey. However, this expectation was for a slight narrowing of the originally reported Q4 deficit, not the sharp widening from the downwardly revised Q4 figure that was observed. Also, the Q1 2016 deficit is much wider compared to the $114.5 billion shortfall posted in Q1 2015.

This report also included significant benchmark revisions--back to 2013 for goods and services and back to 2012 for income and financial transactions. The revisions were mostly to income and served to narrow the overall current account deficit meaningfully in both 2015 and 2013 and to widen the deficit slightly in 2014.

The change in the current account balance from Q4 to Q1 was largely due to changes in the income components. The goods and services deficit actually narrowed $2.4 billion to -$121.9 billion, reflecting a slightly narrowing in the goods deficit and a slight widening in the services surplus. In contrast, both income balances deteriorated. The primary income surplus (mostly net investment income) narrowed significantly from $47.1 billion Q4 to $37.5 billion in Q1, due mainly to increased investment income payments abroad. This was the smallest primary account surplus since Q4 2009. And the secondary income deficit (mostly net government transfers) widened meaningfully from -$36.3 billion to -$40.3 billion. This was the largest secondary income deficit on record. In the trade balance details, both goods exports and imports fell in the first quarter while both services exports and imports posted modest gains.

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

US Balance of Payments SA Q1'16 Q4'15 Q3'15 Y/Y 2015 2014 2013
Current Account Balance ($ Billion) -124.7 -113.4 -123.1 -114.5 -463.0 -392.1 -366.4
  Deficit % of GDP 2.7 2.5 2.7 2.6 2.6 2.3 2.2
 Balance on Goods ($ Billion) -186.4 -188.4 -190.0 -193.5 -762.6 -752.2 -702.2
  Exports -3.1% -3.2% -1.8% -5.9% -7.5% 2.6% 1.9%
  Imports -2.4% -2.3% -1.4% -3.5% -1.4% 4.0% -0.4%
 Balance on Services ($ Billion) 64.6 64.2 64.2 67.0 262.2 262.0 240.4
  Exports 0.6% -0.1% -0.7% 0.1% 1.0% 6.0% 6.9%
  Imports 0.6% -0.2% 1.1% -1.0% 1.5% 4.3% 2.0%
 Balance on Primary Income ($ Billion) 37.5 47.1 41.8 48.4 182.4 224.0 219.0
 Balance on Secondary Income ($ Billion) -40.3 -36.3 -39.3 -36.4 -145.0 -125.9 -123.5
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