WASHINGTON – The U.S. current account deficit, which includes the trade balance of goods, services and investment flows, widened at the end of 2011 to the largest quarterly gap in three years.
Widened by a slight decline in exports and stronger demand for foreign goods, the current accout trade deficit increased 15.3% to $124.1 billion in the 2011's final three months.
For the year, the current account deficit rose 0.6% to $473.4 billion, the biggest imbalance since 2008.A bigger trade deficit hampers economic growth since it means more goods and services are being imported while U.S. companies are making fewer sales overseas.
Economists expect the deficit to keep rising in 2012. Europe's debt crisis is likely to drag on U.S. exports, as is slower growth in Asia. And stronger growth in the United States should boost imports.
Economists watch the current account deficit as a barometer of how much the United States is borrowing from foreigners.
The current account deficit hit an all-time high of $800.6 billion in 2006. It then shrank after the recession reduced demand for imports. The gap began widening again after the recession ended in June 2009.
The overall economy grew just 1.7% in 2011. The country struggled in the early part of the year from a spike in energy prices, supply disruptions caused by the Japanese earthquake and turbulent stock markets. Investors worried about how the European debt crisis would hurt the global economy.
On Tuesday, the Federal Reserve offered a more positive view of the economy, noting recent improvements in the job market. The Fed took no further steps to aid the recovery and reiteratedpeated its plan to keep short-term interest rates near zero through late 2014.
JPMorgan economists predict growth of around 2.2% for the year, slightly better than last year. Still, gas prices are rising once again. And Europe's debt problems continue to pose a threat, although the Fed said some of the danger to the global economy has eased.
Recent reports show the U.S. recovery gaining momentum. Employers have added 734,000 jobs since December, the best three months of hiring in two years. The economy is growing faster, consumer confidence is at its highest point in a year and retail sales are rising.
However, the January deficit for U.S. trade in goods and services, excluding investment flows, increased to $52.6 billion, the largest monthly imbalance in more than three years.
In the fourth quarter of 2011, exports decreased slightly to $380.4 billion, in part because of a drop in overseas demand for U.S. airline tickets. Imports ticked up to $566.7 billion. The larger deficit was partly driven by increased purchases of imported airplanes.
The deficit in goods totaled $186.3 billion, up $5.5 billion from the third quarter. The U.S. surplus on services shrank by $876 million, to $45.3 billion. That reflected in part a drop in foreign purchases of airline tickets.
The surplus on investment income fell to $50.3 billion, a decline of $10.3 billion. A drop in dividend payments to U.S. investors on foreign investments was a factor.
The category that covers U.S. foreign aid payments totaled $33.3 billion in the fourth quarter, slightly lower than the $33.5 billion in payments made in the third quarter.
usatoday.com
Widened by a slight decline in exports and stronger demand for foreign goods, the current accout trade deficit increased 15.3% to $124.1 billion in the 2011's final three months.
For the year, the current account deficit rose 0.6% to $473.4 billion, the biggest imbalance since 2008.A bigger trade deficit hampers economic growth since it means more goods and services are being imported while U.S. companies are making fewer sales overseas.
Economists expect the deficit to keep rising in 2012. Europe's debt crisis is likely to drag on U.S. exports, as is slower growth in Asia. And stronger growth in the United States should boost imports.
Economists watch the current account deficit as a barometer of how much the United States is borrowing from foreigners.
The current account deficit hit an all-time high of $800.6 billion in 2006. It then shrank after the recession reduced demand for imports. The gap began widening again after the recession ended in June 2009.
The overall economy grew just 1.7% in 2011. The country struggled in the early part of the year from a spike in energy prices, supply disruptions caused by the Japanese earthquake and turbulent stock markets. Investors worried about how the European debt crisis would hurt the global economy.
On Tuesday, the Federal Reserve offered a more positive view of the economy, noting recent improvements in the job market. The Fed took no further steps to aid the recovery and reiteratedpeated its plan to keep short-term interest rates near zero through late 2014.
JPMorgan economists predict growth of around 2.2% for the year, slightly better than last year. Still, gas prices are rising once again. And Europe's debt problems continue to pose a threat, although the Fed said some of the danger to the global economy has eased.
Recent reports show the U.S. recovery gaining momentum. Employers have added 734,000 jobs since December, the best three months of hiring in two years. The economy is growing faster, consumer confidence is at its highest point in a year and retail sales are rising.
However, the January deficit for U.S. trade in goods and services, excluding investment flows, increased to $52.6 billion, the largest monthly imbalance in more than three years.
In the fourth quarter of 2011, exports decreased slightly to $380.4 billion, in part because of a drop in overseas demand for U.S. airline tickets. Imports ticked up to $566.7 billion. The larger deficit was partly driven by increased purchases of imported airplanes.
The deficit in goods totaled $186.3 billion, up $5.5 billion from the third quarter. The U.S. surplus on services shrank by $876 million, to $45.3 billion. That reflected in part a drop in foreign purchases of airline tickets.
The surplus on investment income fell to $50.3 billion, a decline of $10.3 billion. A drop in dividend payments to U.S. investors on foreign investments was a factor.
The category that covers U.S. foreign aid payments totaled $33.3 billion in the fourth quarter, slightly lower than the $33.5 billion in payments made in the third quarter.
usatoday.com
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