The current account balance for the second quarter 2024 is a deficit of $266.8 billion after a downwardly revised deficit of $241.0 billion in the first quarter. The second quarter deficit is wider than the consensus of minus $259.5 billion in the Econoday survey of forecasters.

In the second quarter, exports of goods, services, and receipts are up 0.4 percent to $1,200.0 billion. Exports of goods are unchanged, exports of services are up 1.2 percent, and income receipts are up 0.4 percent. Exports of goods were mixed with increases in exports of capital goods excluding automotive, automotive, consumer goods excluding automotive, and"other" general merchandise offset by declines in exports of foods and industrial supplies. Gains in services exports were fairly broad-based with notable increases in transport and travel and"other" business services. Exports of income receipts reflected strong equity markets.

Imports of goods, services, and payments in the second quarter rose on a 2.5 percent rise in goods, 1.4 percent increase in services, and 1.7 percent increase in income payments. Imports of goods are notably higher for industrial supplies and capital goods excluding automobiles, automotive, and consumer goods excluding automobiles. Service imports have widespread gains with the most impact from transport and"other" business services. Imports of income payments are from a solid rise in investment income.

Reflecting high imports, the second-quarter current account deficit is expected to deepen to $259.5 billion versus a deficit of $237.6 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.