US current account deficit widens sharply in first quarter

Adam Jeffery | CNBC

The U.S. current account deficit increased to its widest point in 1-1/2 years in the first quarter as exports slumped and the surplus on primary income declined, the Commerce Department said on Wednesday.

The current account gap, which measures the flow of goods, services, and investments into and out of the country, widened to $111.2 billion from a revised $87.3 billion deficit in the fourth quarter.

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That was the largest shortfall since the third quarter of 2012.

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Economists polled by Reuters had forecast the deficit widening to $96.9 billion from a previously reported $81.1 billion shortfall in the final three months of 2013.

The government revised the series going back to the first quarter of 1999. With the revisions, changes in estimation methods, definitions and classifications were also effected.

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The current account deficit represented 2.6 percent of gross domestic product, the largest share since the third quarter of 2012 and up from 2.0 percent in the October-December period.

With an anticipated acceleration in domestic demand expected to suck in imports, the current account shortfall is expected to widen a bit this year.

The surplus on primary income fell to $46.7 billion in the first quarter from $54.6 billion in the fourth quarter. That reflected a decline in income receipts from foreigners holding U.S. financial assets.

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In the first quarter, exports of goods, services and income receipts fell 1.3 percent to $803.3 billion. The drop in exports has been blamed on an unusually cold winter, which caused goods to pile up at ports.

Imports of goods, services and income payments increased 1.5 percent to $914.4 billion.

By Reuters