U.S. Current Account Trade Deficit Hits Another Record

The U.S. current-account trade deficit increased 3.9% to $225.6 billion (preliminary) in the third quarter of 2006 from $217.1 billion in the second quarter, according to The Commerce Department. As a share of U.S. GDP, the deficit increased to 6.8% from 6.6%. 


The deficit on international trade in goods increased to $218.6 billion from $210.6 billion, as goods imports increased more than goods exports.

  • The surplus on international trade in services increased to $18.3 billion from $17.5 billion

  • The deficit on income increased to $3.8 billion from $2.2 billion

  • Net unilateral current transfers to foreign residents were $21.5 billion, down from $21.9 billion.

Net financial inflows—net acquisitions by foreign residents of assets in the United States less net acquisitions by U.S. residents of assets abroad—were $176.4 billion in the third quarter, up from $153.2 billion in the second.

  • U.S.-owned assets abroad increased $223.8 billion in the third quarter after they had increased $211.4 billion in the second.

  • Foreign-owned assets in the United States increased $400.2 billion in the third quarter after they had increased $364.6 billion in the second.

U.S. direct investment abroad increased $63.1 billion in the third quarter, following an increase of $46.8 billion in the second.

Foreign direct investment in the United States increased $44.1 billion in the third quarter, following an increase of $45.8 billion in the second.

Net purchases by foreigners of U.S. securities other than U.S. Treasury securities were $138.8 billion in the third quarter, up from $127.3 billion in the second.

In the third quarter, the U.S. dollar depreciated 1 percent on a trade- weighted quarterly average basis against a group of 7 major currencies.

The current account deficit is expected to hit a new record for the full year, far surpassing last year's $791.5 billion imbalance. 

The current account balance is the broadest measure of U.S. international trade in goods and services, receipts and payments of income, and net unilateral current transfers (such as gifts).

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