US current account deficit widens 15.7% to $246 billion in Q2 on import surge

Washington: The US current account deficit widened sharply in the second quarter amid a surge in imports of goods, government data showed on Thursday.

The Commerce Department's Bureau of Economic Analysis said the current account deficit, which measures the flow of goods, services and investments into and out of the country, increased $33.4 billion, or 15.7%, to $246.0 billion last quarter.

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Data for the January-March quarter was revised lower to show the shortfall at $212.6 billion instead of the previously estimated $226.8 billion. Economists polled by Reuters had forecast the current account gap would widen to $255.0 billion.

The second-quarter current account deficit represented 3.0% of gross domestic product, up from 2.7% in the January-March quarter. It peaked at 6.3% in the third quarter of 2006. While the current account deficit has no impact on the dollar, given the greenback's status as a reserve currency, concerns are growing over the nation's ballooning twin deficits.

Goods imports shot up by $67.4 billion to $931.6 billion. That outpaced a $27.1 billion increase in exports of goods to $640.3 billion. As a result, the goods trade deficit widened $40.4 billion to $291.3 billion. Trade subtracted 1.14 percentage points from gross domestic product in the second quarter and has been a drag for three straight quarters.

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The primary income balance narrowed to $11.4 billion last quarter from $15.8 billion in the January-March quarter. Primary income receipts rose to $416.2 billion from $391.5 billion in the prior quarter. Primary income payments increased to $427.6 billion from $407.3 billion in the first quarter.

The nation's international investment position, the difference between US residents' foreign financial assets and liabilities, deteriorated slightly to a $22.42 trillion deficit at the end of the second quarter from a $21.27 trillion shortfall in the first quarter. Assets totaled $46.97 trillion, while liabilities amounted to $69.39 trillion.