Thursday, July 31st20.5°C
21450
22412

US current account deficit jumps from 14-year low as exports, overseas earnings fall

WASHINGTON - A drop in U.S. exports and lower income from overseas investments drove the U.S. current account deficit to its highest level in 18 months.

The Commerce Department says the deficit jumped to a seasonally adjusted $111.2 billion in the January-March quarter, up from a revised total of $87.3 billion in the October-December quarter. The fourth quarter's total was the smallest in 14 years.

The current account is the country's broadest measure of trade, covering not only goods and services but also investment flows. A wider deficit can act as a drag on growth because it means U.S. companies are earning less from their overseas markets.

Rising petroleum exports have narrowed the gap in recent years, though such exports fell in the first quarter, widening the deficit.

Overall exports dropped to $399.7 billion from $407.1 billion in the previous quarter, according to the report released Wednesday. Exports of food and feeds also fell, mostly because of a drop in soybean exports. Harsh winter weather harmed many U.S. harvests.

A larger trade gap in the first three months of this year cut nearly a full percentage point from growth. Economists now estimate the economy contracted at an annual pace of 2 per cent in the first quarter. But they expect growth will resume in the current quarter at roughly a 3.5 per cent rate.

Americans received $196.5 billion in income from overseas investments, down from $198.8 billion in the previous quarter.

The current account gap is still relatively low by historical standards. It regularly topped $150 billion in the four years before the recession.

Two principal trends have narrowed the deficit in the past four years. First, the U.S. has benefited from an oil and gas boom, mostly because new drilling technologies have made it feasible to drill for oil and gas in states such as North Dakota, New York and Pennsylvania.

That's pushed down the trade deficit by boosting petroleum exports and lowering oil imports. Petroleum exports reached a record high last year, while imports dropped nearly 11 per cent.

Secondly, low U.S. interest rates have reduced the payments foreigners have received on their holdings of U.S. Treasury bonds and other investments. Meanwhile, the payments that Americans receive on overseas investments have risen, boosting the nation's investment surplus.

The Canadian Press


Read more Business News




Recent Trending




Today's Market
S&P TSX15330.74-194.08
S&P CDNX1001.52-9.58
DJIA16563.30-317.06
Nasdaq4369.773-93.129
S&P 5001930.67-39.40
CDN Dollar0.9154-0.0015
Gold1310.00+6.70
Oil98.00-0.17
Lumber326.90+2.50
Natural Gas3.73-0.017

 
Okanagan Companies
Pacific Safety0.18-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.21-0.01
Cantex0.085+0.02
Anavex Life Sciences0.262+0.002
Metalex Ventures0.08-0.005
Russel Metals35.23+0.01
Copper Mountain Mining2.75-0.08
Colorado Resources0.205-0.015
ReliaBrand Inc0.10+0.019
Sunrise Resources Ltd0.03-0.005
Mission Ready Services0.150.00

 





FEATURED Property
1796619200 - 440 Cascia Drive, Kelowna, BC
5 bedrooms 5 baths
$2,295,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Take charge of your debt

Photo: Thinkstock.comWays to reduce your Debt:Make a budget and get budget counselingA basic first step for debt reduction is to prepare a budget and plan your spending. Once you have a budget, you mu...


Geopolitical tensions rattle markets

The Big Picture Geopolitical tensions rattle markets The spectre of rising geopolitical tensions in Ukraine and Gaza cast a shadow over an otherwise positive week in the markets. News that a passenger...


Learn to delegate effectively

Photo: ContributedI have the pleasure of witnessing people delegate tasks quite often. Sometimes with tremendous success and sometimes with disastrous consequences. I have chaired a lot of committees...

_








Member of BC Press Council


22758