U.S. Current Account Deficit Widened to a Record in Q3 2024
by:Sandy Batten
|in:Economy in Brief
Summary
- Goods deficit widened by $10 billion. Services surplus widened by nearly $2 billion.
- Balance on primary income posted a deficit for only the fifth quarter in the history of the series.
- Secondary income deficit widened by nearly $16 billion, the largest quarterly increase in the series history.
The U.S. current account deficit widened markedly in the third quarter of 2024 to a record $310.9 billion from an upwardly revised $275.0 billion in Q2 (previously $266.8 billion). The series dates back to 1960. The Action Economics Forecast Survey had expected the deficit to widen to $284.0 billion in Q3. The Q3 deficit was 4.2% of GDP, up from 3.8% in Q2.
While the burgeoning goods deficit continued to be the driving force behind the widening current account shortfall, the balance on primary income and the balance on secondary income played a larger role than usual in Q3. The primary income balance posted its second consecutive deficit, for only the fifth time in the series history. The deficit widened $11.7 billion to a record $15.5 billion in Q3. Primary income receipts plunged $15.5 billion while primary income payments declined $3.8 billion. Primary income includes investment income and compensation of employees. The secondary income deficit widened $15.9 billion (a record for the series) to $61.9 billion (also a record). Secondary income receipts edged up $0.2 billion while secondary income payments surged a record $16.1 billion, mostly reflecting an increase in general government transfers. Secondary income includes transfer payments by governments, tax withholdings and insurance payments, among other items.
The goods trade deficit widened $10.1 billion to $307.3 billion in Q3. Goods exports increased a solid 2.6% q/q, reflecting an increase in capital goods, mostly semiconductors; computer accessories, peripherals, and parts; and civilian aircraft. Goods imports rose 2.9% q/q, reflecting increases in capital goods, mostly computer accessories, peripherals, and parts; electric-generating machinery, electric apparatus, and parts; and computers, and in consumer goods, mainly medicinal, dental, and pharmaceutical products.
The services surplus widened $1.8 billion to $73.7 billion in Q3. Exports of services increased 2.8% q/q, reflecting increases in government goods and services, mostly military units and agencies, and in telecommunications, computer, and information services, mostly computer services. Imports of services rose 3.0%, reflecting increases in charges for the use of intellectual property, mostly licenses to reproduce and/or distribute audiovisual products, and in insurance services, mostly reinsurance.
Among financial account transactions, the net acquisition of financial assets rebounded, rising $18.7 billion to $201.9 billion in Q3. The net incurrence of financial liabilities surged $385.7 billion to $716.7 billion in Q3, the highest reading since Q1 2020.
Balance of Payments data are in Haver’s USINT database, with summaries available in USECON. The expectations figure is in the AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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