Current Account Posts Larger Than Expected Deficit

The US current account in the first quarter posted a larger-than-expected deficit of $130.4 billion which, however, is favorable compared to a sharply revised $143.9 billion deficit in the fourth quarter. As a percentage of GDP, the current account fell to a moderate 2.5 percent vs the fourth quarter's less moderate 2.8 percent.

Improvement in the trade balance is the source of the first quarter improvement, as the balance on goods and services narrowed by a very sizable $16.5 billion to $154.6 billion vs $171.1 billion in the fourth quarter. The great bulk of this improvement is in goods where the deficit narrowed by $15.8 billion to $216.5 billion. The balance on secondary income was a negative in the first quarter, as this deficit deepened by $4.1 billion to $36.9 billion reflecting decreases in both private and US government transfers. The fourth quarter data reflected a widening in the revised trade gap and a deepening in the secondary income deficit.