Current account deficit falls to 14-year low
WASHINGTON — Big gains in exports and overseas investment income narrowed the current account deficit to the lowest level in 14 years in the October-December quarter.
The imbalance fell to $81.1 billion in the fourth quarter, down from $96.4 billion in the July-September quarter, the Commerce Department said on Wednesday. That's the smallest gap since the third quarter of 1999.
The current account is the country's broadest measure of trade, covering not only goods and services, but also investment flows. A smaller trade deficit usually means that U.S. companies are producing more to meet domestic and overseas demand.
Goods exports rose 1.9 percent to $405.4 billion, driven by higher overseas sales of petroleum and agricultural products.
Americans received $206.1 billion in overseas income, mostly from investments, a 4.3 percent increase from the previous quarter. Payments to overseas owners of U.S. assets rose 2.4 percent to $137.8 billion. That helped push the U.S. income surplus to $64.4 billion.
As a percentage of the U.S. economy, the current account deficit declined to 1.9 percent, the lowest since the third quarter of 1997.
Two trends have helped narrow the gap in the past several years. The United States has benefited from an oil and gas boom because new drilling technologies have made it feasible to drill in states such as North Dakota and Pennsylvania.
That has pushed down the trade deficit by boosting petroleum exports and lowering oil imports. The deficit in goods and services trade fell to a four-year low in November. It has widened slightly since then.
Secondly, low U.S. interest rates have reduced the payments foreigners have received on their holdings of U.S. Treasury bonds and other investments. Meanwhile, the payments that Americans receive on overseas investments have risen, boosting the nation's investment surplus.
The monthly trade deficit (merchandise and services) widened a bit in January, as Americans imported more food, machinery and petroleum.
The economy grew at a 2.4 percent annual pace in the final three months of last year, down from a healthy 4.1 percent rate in the July-September quarter.
Growth will likely weaken in the current January-March quarter, to about 2 percent, but most economists expect it will then pick up to a 3 percent pace for the rest of the year.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Dick’s cuts PGA professionals as golf business declines
- Social Security spent $300M on ‘IT boondoggle’
- S&P 500 reaches new heights
- Amwell wastewater site to be shut down
- Latrobe’s Ci Medical Technologies transforms to medical device business
- 10 million Americans sought help to enroll in Obamacare
- Federal appeals courts disagree on Obamacare subsidies
- Sluggish growth elsewhere could infect healthy U.S. economy
- Chrysler recalls up to 792K Jeep SUVs for ignition switch defect