WASHINGTON: The United States’ current account deficit increased to a 14-year high in the second quarter as businesses boosted imports to replenish depleted inventories amid robust consumer spending.
The Commerce Department said on Tuesday that the current account deficit, which measures the flow of goods, services and investments into and out of the country, rose 0.5 per cent to US$190.3 billion last quarter. That was the largest shortfall since the second quarter of 2007, report agencies.
The current account gap represented 3.3 per cent of gross domestic product last quarter. That was down from 3.4 per cent in the January-March quarter. Still, the deficit remains below a peak of 6.3 per cent of GDP in the fourth quarter of 2005 as the US is now a net exporter of crude oil and fuel.
The wider deficit is likely not an issue for the US because of the dollar’s status as the world’s reserve currency. The current account gap could remain big as the nation leads the global economic recovery from the Covid-19 pandemic.
The economy grew at a 6.6 per cent annualised rate in the second quarter, powered by another quarter of double-digit growth in consumer spending. Domestic demand, which has been buoyed by fiscal stimulus and vaccinations against the coronavirus, is being partially satiated with imports.
Inventories were depleted in the first half of the year.
Imports of goods increased US$29.0 billion to US$706.3 billion, primarily reflecting an increase in industrial supplies and materials, mostly petroleum products as well as metals and nonmetallic products.
Imports of services increased US$9.1 billion to US$127.8 billion, mostly reflecting increases in sea freight and air passenger transport as well as other personal travel.
Exports of services increased US$7.6 billion to US$189.1 billion. They were driven by personal travel.
Primary income receipts advanced US$7.7 billion to US$270.6 billion. Payments of primary income rose US$8.8 billion to US$221.5 billion. The increases in both receipts and payments mainly reflected advances in direct investment income.
Secondary income receipts dropped US$0.9 billion to US$41.6 billion, pulled down by declines in general government transfers, mostly public sector fines and penalties. Payments of secondary income fell US$3.5 billion to US$72.6 billion as general government transfers decreased.