The U.S. current account deficit hit a record high in the first quarter amid a surge in imports of goods as businesses rebuilt inventories to meet strong domestic demand.
The Commerce Department said Thursday (June 23) that the current account deficit, which measures the flow of goods, services and investment in and out of the country, accelerated 29.6% to a record high of $291.4 billion last quarter. Economists polled by Reuters had forecast a deficit of $273.5 billion.
The current account gap was 4.8% of gross domestic product (GDP). It was the largest share since the third quarter of 2008, and was up 3.7 percent in the October-December quarter. The deficit peaked at 6.3% of GDP in the fourth quarter of 2005.
The United States is now a net exporter of crude oil and fuel. Given the status of the greenback as the world’s reserve currency, the huge deficit is not a problem for the United States.
Imports of goods rose US$71.1 billion to a record US$829.7 billion, reflecting large gains in consumer goods, industrial supplies and materials, and capital goods. Goods exports increased by US$13.9 billion to US$487.4 billion, also a record high. They were stimulated by shipments of supplies and industrial materials, mainly oil and related products.
A record trade deficit helped sink GDP in the first quarter, which fell at an annualized rate of 1.5%.
Primary income receipts increased by US$7.1 billion to US$278.6 billion, and primary income payments increased by US$10.7 billion to US$245.2 billion . The increases largely reflect higher portfolio investment income, primarily from equity securities and interest on long-term debt securities.
Secondary income receipts increased by $0.5 billion to $43.6 billion, driven by an increase in transfers from general government, mainly income and wealth taxes. Secondary income payments increased by US$4.7 billion to US$84.7 billion, reflecting increases in general government transfers, mainly international cooperation, and private transfers, mainly government-related transfers. ‘insurance.