| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | $-209.0B | $-210.0B to $-198.0B | $-194.8B | $-200.3B | $-196.4B |
Highlights
The current account balance for the fourth quarter 2023 is a deficit of $194.8 billion after a revision smaller to $196.4 billion in the third quarter. The fourth quarter deficit is narrower than the consensus deficit of $209.0 billion in the Econoday survey of forecasters.
The fourth quarter deficit reflects a 0.2 percent increase in exports of goods, services, and receipts to $1,180.0 billion and virtually no change in imports of goods, services, and payments to $1,374.8 billion.
Exports of goods are down 0.3 percent to $514.4 billion, services exports are up 0.8 percent to $254.4 billion, and receipts of income are up 0.3 percent to $411.2 billion. Notable in exports of goods is a 11.0 percent decline in automotive vehicles, probably due in part to the UAW strike that severely curtailed production. However, there is a 5.8 percent increase for foods, feeds, and beverages and 4.5 percent rise for industrial supplies and materials. Exports for services are particularly strong for construction at up 12.6 percent, although the dollar value is relatively small in the services category. Transport services are up 5.2 percent, insurance services up 4.9 percent, and telecommunications up 4.4 percent. Among income receipts,"other" investment income is up 4.8 percent and secondary income is up 11.1 percent, while direct investment income is down 4.1 percent and reserve asset income down 1.4 percent.
Imports of goods are up 0.6 percent to $779.4 billion, imports of services are up 1.4 percent to $181.5 billion, and income payments are down 1.5 percent to $414.0 billion. Among goods imported, there are significant gains of 2.7 percent for industrial supplies and materials, 2.3 percent for capital goods except automotive, and 1.0 percent for foods, feeds, and beverages. However, these are offset by declines of 2.7 percent for other general merchandise and 2.0 percent for consumer goods except food and automotive. Imports of services are supported by gains of 8.4 percent in maintenance and repair, 6.8 percent in travel, and 2.9 percent for personal, cultural, and recreation services. Income payments from abroad are down 5.6 percent for direct investment income and 3.9 percent for secondary income, more than offsetting a gain of 3.1 in other investment income and 3.1 percent for employee compensation.
The fourth quarter deficit reflects a 0.2 percent increase in exports of goods, services, and receipts to $1,180.0 billion and virtually no change in imports of goods, services, and payments to $1,374.8 billion.
Exports of goods are down 0.3 percent to $514.4 billion, services exports are up 0.8 percent to $254.4 billion, and receipts of income are up 0.3 percent to $411.2 billion. Notable in exports of goods is a 11.0 percent decline in automotive vehicles, probably due in part to the UAW strike that severely curtailed production. However, there is a 5.8 percent increase for foods, feeds, and beverages and 4.5 percent rise for industrial supplies and materials. Exports for services are particularly strong for construction at up 12.6 percent, although the dollar value is relatively small in the services category. Transport services are up 5.2 percent, insurance services up 4.9 percent, and telecommunications up 4.4 percent. Among income receipts,"other" investment income is up 4.8 percent and secondary income is up 11.1 percent, while direct investment income is down 4.1 percent and reserve asset income down 1.4 percent.
Imports of goods are up 0.6 percent to $779.4 billion, imports of services are up 1.4 percent to $181.5 billion, and income payments are down 1.5 percent to $414.0 billion. Among goods imported, there are significant gains of 2.7 percent for industrial supplies and materials, 2.3 percent for capital goods except automotive, and 1.0 percent for foods, feeds, and beverages. However, these are offset by declines of 2.7 percent for other general merchandise and 2.0 percent for consumer goods except food and automotive. Imports of services are supported by gains of 8.4 percent in maintenance and repair, 6.8 percent in travel, and 2.9 percent for personal, cultural, and recreation services. Income payments from abroad are down 5.6 percent for direct investment income and 3.9 percent for secondary income, more than offsetting a gain of 3.1 in other investment income and 3.1 percent for employee compensation.
Market Consensus Before Announcement
The fourth-quarter current account deficit is expected to widen to $209.0 billion versus a lower-than-expected deficit of $200.3 billion in the third 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.
