The current account balance for the second quarter 2023 is a deficit of $212.1 billion following a revision to a deficit of $214.5 billion in the first quarter. The second quarter deficit is narrower than the consensus of minus $220.6 billion in the Econoday survey of forecasters. In the second quarter, exports of goods, services, and receipts are down 0.7 percent to $1,145.3 billion, while imports of goods, services, and receipts are also down 0.7 percent to $1,357.4 billion.

Exports of goods are down 5.5 percent to 4497.6 billion in the second quarter, services exports are up 1.9 percent to $247.3 billion, and income receipts are up 4.3 percent to $400.4 billion.

Imports of goods are down 2.2 percent to $772.8 billion, imports of services are down 3.0 percent to $175.7 billion, and payments are up 3.1 percent to $409.0 billion.

The BEA said the decrease in exports and imports of goods"mostly reflected a decrease in industrial supplies and materials, primarily petroleum and products". Exports of services were mainly in travel and other businesses services. Imports of services are down mostly due to sea freight transport, other business services, and travel. Among receipts and payments of income, primary income is led by other investment income which reflects"higher short-term interest rates amid tightening of US and foreign monetary policy", the BLS said.

The second-quarter current account deficit is expected to widen to $220.6 billion versus $219.3 billion in the first quarter.

The current account, on a quarterly basis, measures the U.S. international balance in goods and services trade as well as unilateral transfers. (Bureau of Economic Analysis)

U.S. trade with foreign countries holds important clues to economic trends here and abroad. The data can directly impact all the financial markets, but especially the foreign exchange value of the dollar. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States since this trade imbalance creates greater demand for foreign currencies.

The bond market is very sensitive to the risk of importing inflation or deflation. When Asian economies collapsed at the end of 1997, bond and equity investors feared that deflation in these economies would be transported to the United States. While goods inflation did decline modestly and momentarily, service inflation kept on ticking. Thus, the linkage is not so direct.

A chronic current account deficit also suggests that consumers and businesses in the United States are outspending their income. We are living on credit while foreigners are paying for our profligate ways.