Economy

US current account deficit falls to 14-year low

WASHINGTON (AP) — Big gains in exports and overseas investment income narrowed the U.S. 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 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 U.S. 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, which covers 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.

Related Headlines

  • US current account deficit jumps from 14-year low

    A drop in U.S. exports and lower income from overseas investments drove the U.S. current account deficit to its highest level in 18 months. The Commerce Department says the ... 

  • Baghira, Seabulk Arctic

    US trade gap narrows to lowest level in 5 months

    The U.S. trade deficit fell in June to its lowest level since January as imports dropped sharply, led by lower shipments of cellphones, petroleum, and cars. The trade deficit ... 

  • US trade gap narrows in July

    The U.S. trade deficit fell in July to its lowest level since January, as exports of autos, telecom equipment, industrial machines and semiconductors rose. The trade deficit ... 

  • US trade deficit at two-year high in April

    The U.S. trade deficit jumped to a two-year high in April, as exports declined and imports surged to a record high. The deficit rose to $47.2 billion in April, up 6.9 percent ... 

Find the best rates

Find your future job here