Comment on U.S. Current Account Release
June 18, 2014
Although the deficit of $111.156 billion last quarter was 27.3% wider than the 14-year low recorded in the final quarter of 2013 and greater than analysts were anticipating, the shortfall’s size relative to nominal GDP of 2.6% was consistent with results since 2009. That ratio had fallen to 2.0% in 4Q13 but averaged marginally less than 2.8% from the first quarter of 2009 through the third quarter of last year. A similar ratio was also achieved in 1998-99, but the current account ballooned in 2000-08 to 4.8% on average, ranging from 3.7% in 2001 to 5.8% in 2006 and averaging 4.8% of GDP over the whole nine years. By further comparison, the current account deficit in 1993-1997 averaged 1.6% of GDP. So the current account, which has benefited greatly from greater energy self-sufficiency, dollar depreciation after 2002 and low U.S. interest rates, was roughly on a par with earlier results in the current economic upswing but not as strong as it was through much of the 1990’s. In recent years, too, Euroland’s current account has swung from deficit to an upwardly trending surplus, while Japan’s surplus has narrowed substantially with the emergence of a trade deficit that seems unlikely to go away for several more years.
Copyright 2014, Larry Greenberg. All rights reserved. No secondary distribution without express permission.