| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | $-203.0B | $-225.0B to $-190.3B | $-200.3B | $-212.1B | $-216.8B |
Highlights
The current account deficit narrowed slightly more than expected to $200.3 billion in the third quarter from $216.8 billion in the second quarter, which was revised from an initial estimate of a $212.1 billion gap.
The $16.5 billion current account deficit narrowing mostly reflected a reduction in the goods deficit to $261.0 billion from $275.5 billion. The services surplus widening to $76.2 billion from $71.7 billion also contributed. Overall, the goods and services gap narrowed to $184.7 billion from $203.8 billion.
Exports of goods and services to, and income received from, foreign residents increased $33.0 billion to $1.18 trillion, while imports rose $16.5 billion to $1.38 trillion.
Exports of goods were up $19.1 billion to $516.4 billion in the third quarter and imports rose $4.6 billion to $777.4 billion, with gains in most major categories for both imports and exports.
Within services, exports rose $2.7 billion to $252.2 billion, while imports were down $1.9 billion to $176.0 billion, led by transport.
The $16.5 billion current account deficit narrowing mostly reflected a reduction in the goods deficit to $261.0 billion from $275.5 billion. The services surplus widening to $76.2 billion from $71.7 billion also contributed. Overall, the goods and services gap narrowed to $184.7 billion from $203.8 billion.
Exports of goods and services to, and income received from, foreign residents increased $33.0 billion to $1.18 trillion, while imports rose $16.5 billion to $1.38 trillion.
Exports of goods were up $19.1 billion to $516.4 billion in the third quarter and imports rose $4.6 billion to $777.4 billion, with gains in most major categories for both imports and exports.
Within services, exports rose $2.7 billion to $252.2 billion, while imports were down $1.9 billion to $176.0 billion, led by transport.
Market Consensus Before Announcement
The third-quarter current account deficit is expected to narrow further to $203.0 billion versus a narrower-than-expected $212.1 billion in the second quarter.
Definition
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)
Description
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.
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.
