The U.S. current account deficit rose to a 14-year high in the second quarter as businesses boosted imports to refuel depleted inventories amidst robust consumer spending.
- The Commerce Department on Tuesday stated that the current account deficit rose by 0.5% to $190.3 billion last quarter. That was the most significant shortfall since the second quarter of 2007.
- Figures for the first quarter were revised to show a $189.4 billion gap rather than $195.7 billion as previously reported.
- The current account gap made up 3.3% of gross domestic product last quarter. That was down from 3.4% in the January-March quarter. Still, the deficit remains below a peak of 6.3% of GDP in Q4 of 2005.
- The wider deficit is likely not a major concern for the United States because of the dollar’s status as the world’s reserve currency. The current account gap could remain big as the economy recovers from the pandemic.
The economy grew at a 6.6% annualized pace in Q2, backed by another quarter of double-digit growth in consumer spending. Domestic demand has been boosted by fiscal stimulus and vaccinations against the COVID-19.
DXY up +0.04%, EUR USD down -0.05%Source: U.S. Department of Commerce