US current account deficit contracts sharply in the third quarter

The U.S. current account deficit narrowed sharply in ‍the third quarter ​as tariffs weighed on imports and primary income surged.

The ⁠Commerce Department's Bureau of Economic Analysis said on Wednesday the current account deficit, which measures the flow of goods, services and investments into ‌and out ‌of the country, contracted by $22.8 billion, or 9.2%, to $226.4 billion, the lowest level since ‌the third quarter of 2023.

Economists polled by Reuters had forecast the current account deficit shrinking to $238.4 billion. The report was delayed by the 43-day shutdown of the government.


The deficit represented 2.9% of gross domestic product, the smallest since the first quarter of 2020 and down from 3.3% ‌in the second ‍quarter. It peaked at 6.3% in the ‍third quarter of 2006. President Donald Trump's sweeping ‌tariffs have led to an ebb in the flow of imports, helping to narrow the trade deficit.

Imports of goods decreased $5.0 billion to $815.4 billion in the third quarter, pulled down by a decline in consumer goods. But nonmonetary gold imports increased. Imports of services increased $3.1 billion to $225.0 billion.

Goods exports ‍fell $1.9 billion to $548.0 billion, weighed down by nonmonetary gold, though exports of capital and consumer goods increased. ‍Exports of ⁠services increased $11.7 ⁠billion to $314.2 billion.

The goods trade deficit narrowed to $267.4 billion from $270.4 billion in the prior quarter.

Receipts of primary income increased $16.3 billion to $395.2 billion, led by a rise in direct investment income. Payments of primary income advanced $5.3 billion to $390.0 billion.

Receipts of secondary income decreased $2.0 billion to $44.4 billion. Payments of secondary income declined $2.1 billion to $97.9 billion as general government transfers decreased.