US current account deficit slims down to less than half of peak

Ben Southwood
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THE US current account deficit narrowed again in the second quarter, preliminary figures from the Bureau of Economic Analysis revealed yesterday.

The combined balance on trade in goods and services came down from $133.6bn (£82.3bn) to $117.4bn in the second quarter, a fall of around 12 per cent.

This big quarterly move is the latest in a trend of rebalancing, which has brought the US deficit down from a high of 6.5 per cent of GDP in 2005 to its current position at just three per cent of GDP.

But some analysts said oil price increases could turn this trend around. “The more recent rebound in oil prices should push the deficit wider in the third quarter,” said Paul Dales at Capital Economics, “Overall the deficit may widen – but it shouldn't get back to the [level] that prompted widespread concerns about the US dollar.”