Overview
- The U.S. Bureau of Economic Analysis reported on Wednesday that the current-account deficit grew $5.8 billion from the revised fourth quarter to $226.8 billion, equal to 2.9% of GDP.
- Primary income moved from a $3.431 billion surplus in Q4 to a $13.3 billion shortfall in Q1 as foreigners earned more on U.S. holdings while U.S. receipts fell, making the income swing the main driver of the wider deficit.
- Trade flows improved overall: exports of goods and services rose by $50.0 billion to $1.38 trillion while imports rose by $55.8 billion to $1.61 trillion, and the goods deficit narrowed versus the prior quarter.
- The net international investment position improved to –$21.27 trillion largely because U.S. liabilities fell in market value by about $1.18 trillion, which reflects price and valuation effects rather than a reduction in foreign holdings.
- Financial-account inflows of roughly $803.7 billion continued to fund the gap, meaning the United States remains dependent on foreign capital and will face higher foreign income payments if investment returns and interest costs keep rising.