| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | $-302.0B | $-380.0B to $-256.0B | $-251.3B | $-450.2B | $-439.8B |
Highlights
The current account deficit for the second quarter 2025 narrows sharply to $251.3 billion after small upward revision to a deficit of $439.8 billion in the first quarter. The second quarter deficit is smaller than the consensus of minus $302.0 billion in the Econoday survey of forecasters. The swing is mainly due to a drop in imports of goods after businesses front-loaded purchases ahead of expected higher tariffs.
Exports of goods, services, and receipts total $1,273.8 billion in the second quarter after $1,245.3 billion in the first quarter and are up 2.3 percent. In the second quarter, goods exports are up 2.1 percent, services exports are up 0.7%, and import receipts are up 3.7%.
Imports of goods, services, and payments total $1,525.2 billion in the second quarter after $1,685.1 billion in the first quarter and are down 9.5 percent. In the second quarter, imports of goods are down 18.4 percent, imports of services are up 1.3 percent, and income payments are up 4.7 percent.
Exports of goods, services, and receipts total $1,273.8 billion in the second quarter after $1,245.3 billion in the first quarter and are up 2.3 percent. In the second quarter, goods exports are up 2.1 percent, services exports are up 0.7%, and import receipts are up 3.7%.
Imports of goods, services, and payments total $1,525.2 billion in the second quarter after $1,685.1 billion in the first quarter and are down 9.5 percent. In the second quarter, imports of goods are down 18.4 percent, imports of services are up 1.3 percent, and income payments are up 4.7 percent.
Market Consensus Before Announcement
The consensus sees the deficit narrowing to $302.0 billion in Q2 from $450.2 billion in Q1 with the shrinkage in the trade deficit.
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.
