Current Account Deficit Hits Record in 4Q

Washington, DC, March 16–The U.S. current account deficit widened to a record $187.9 billion in the fourth quarter, according to the Commerce Department.

For all 2004, the deficit reached a record $665.9 billion, equivalent to 5.7 percent of nation’s gross domestic product, the most ever.

A deficit in the nation’s balance of trade accounts for 91 percent of the current account shortfall. Americans imported $171.1 billion more goods and services than they exported in the fourth quarter compared with a $155.9 billion trade gap the prior three months.

The trade deficit widened to $58.3 billion in January, the second largest ever, as imports of consumer goods, such as televisions, clothing and toys, jumped to a record, Commerce said last week.

Foreign financial flows into the U.S. more than compensated for the shortfall in trade. Foreigners increased their holdings of U.S. assets by $92.5 billion in January, the Treasury reported yesterday, almost twice the gap in trade. The gain compares with an average $76.3 billion increase per month in 2004.