U.S. Current Account Deficit Widens Sharply

WASHINGTON (Reuters) – The U.S. current account deficit widened sharply in the second quarter, reaching its highest level in more than two years amid a surge in imports of goods.

The Commerce Department’s Bureau of Economic Analysis reported on Thursday that the current account deficit—measuring the flow of goods, services, and investments into and out of the country—expanded by $25.8 billion, or 10.7%, to $266.8 billion last quarter.

This level marks the highest since the first quarter of 2022. Economists surveyed by Reuters had anticipated the current account deficit to be at $260.0 billion.

The current account gap accounted for 3.7% of the gross domestic product (GDP), the highest since the second quarter of 2022, up from 3.4% in the first quarter. The deficit peaked at 6.3% of GDP in the fourth quarter of 2005.

The large current account deficit does not affect the dollar due to its status as a reserve currency.

Imports of goods rose by $20.1 billion to $813.9 billion, the highest since the second quarter of 2022, driven by increases in capital goods, particularly computer accessories, peripherals, and components, as well as computers and semiconductors.

Additionally, imports of consumer goods increased, largely fueled by medicinal, dental, and pharmaceutical products.

In contrast, goods exports fell slightly by $0.1 billion to $516.7 billion, influenced by a significant decline in exports of nonmonetary gold, which countered gains in capital goods, mainly computers.

The goods trade deficit widened to $297.1 billion, the largest since the second quarter of 2022, compared to $276.9 billion in the first quarter.