US Current Account Trade Deficit at Highest Level in 7 Years

[mahatmakanejeeves]

Last edited Thu Jun 16, 2016, 01:12 PM - Edit history (1)

Source: Associated Press, via ABC News

US Current Account Trade Deficit at Highest Level in 7 Years

By martin crutsinger, ap economics writer ·
WASHINGTON — Jun 16, 2016, 8:47 AM ET

The deficit in the nation's broadest measure of trade increased in the January-March quarter to the highest level in more than seven years.

The current account trade deficit jumped 9.9 percent in the first quarter to $124.7 billion, the Commerce Department reported Thursday. It was the biggest gap since a deficit of $152.5 billion in the fourth quarter of 2008, the height of the financial crisis.

The higher deficit reflected a $9.6 billion decline in the surplus on investment earnings. That offset a $2 billion decrease in the deficit on merchandise trade and an increase of $400 million in the surplus on services.

The current account is the broadest measure of trade because it covers not only trade in goods but also services and investment flows. Economists closely watch the figure because it indicates how much the United States needs to borrow from foreigners.

The first quarter deficit represented 2.7 percent of overall economic output, as measured by the gross domestic product, up from 2.5 percent in the fourth quarter when the deficit totaled $113.4 billion.

Read more: http://abcnews.go.com/Business/wireStory/us-current-account-trade-deficit-highest-level-years-39901108

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ETA, 1:06 p.m.: My first account was just the news story, a straight cut-and-paste affair.

In reply #8, whatthehey does a great job of explaining (**cough** to me too **cough**) what this means. Here's a Wikipedia site that says what he said:

Current account

In economics, a country's current account is one of the two components of its balance of payments, the other being the capital account (sometimes called the financial account). The current account consists of the balance of trade, net primary income or factor income (earnings on foreign investments minus payments made to foreign investors) and net cash transfers, that have taken place over a given period of time. The current account balance is one of two major measures of a country's foreign trade (the other being the net capital outflow). A current account surplus indicates that the value of a country's net foreign assets (i.e. assets less liabilities) grew over the period in question, and a current account deficit indicates that it shrank. Both government and private payments are included in the calculation. It is called the current account because goods and services are generally consumed in the current period.

Thanks, whatthehey.

[tonyt53]

1. The high dollar hurts exports

[bhikkhu]

2. And the dollar is high because of the relative strength of the US economy

a catch-22 situation

[Fumesucker]

3. The rest of the world must be in dire straits indeed then...

Majority of US public school students are in poverty...

http://www.democraticunderground.com/10027920977

[mahatmakanejeeves]

4. That story is a year and a half old, even though it was posted yesterday.

Also, it's about students in the 2012-2013 school year:

The Southern Education Foundation reports that 51 percent of students in pre-kindergarten through 12th grade in the 2012-2013 school year were eligible for the federal program that provides free and reduced-price lunches.

[jtuck004]

7. Yup. It's almost certainly worse now. n/t

[mahatmakanejeeves]

9. What makes you believe that? NT

[jtuck004]

10. Because it is.

Except for a small percentage, folks such as bank$ter/jihadists and such, (those who own politicians) the entire country is getting poorer, dying slowly...

http://www.alternet.org/economy/once-middle-class-millions-are-joining-ranks-disposable-americans

[mahatmakanejeeves]

11. These are the same data, from the 2012-2013 school year, that were posted earlier.

Are there newer data that can be cited?

Has the economy changed in any way between then and now that might change things?

[jtuck004]

12. Because you can't read a trend, or don't want to? I guess one could look around at their

neighbors, notice that they have less income and opportunity than they had 20 years ago. One could also acknowledge the data in the second link, which has other, newer numbers from places like the SSA.

No, the economy hasn't changed for many working and unemployed people, still in the shitter, unlike that of the big rentiers and donors to the party.

It's a lot easier to sit in a chair and ignore others very real pain, isn't it?. That does seem to be one of the great sports of the comfortable.

Cya.

[scottie55]

5. And Will Double With TPP

Fact it.

We're being screwed.

[Elwood P Dowd]

6. "The tide of free trade lifts all boats"

Remember that one from the 1990's trade battles. In reality, it lifts all yachts and sinks the folks with regular boats. Hell, thanks to so called "free trade", millions of Americans can't even afford to plug the damn holes in their boat. Free trade is nothing more than an investment/outsourcing scam to benefit the rich. It's just as big a lie to working Americans as deregulation and trickle down economics.

[whatthehey]

8. And predictably people make wrong assumptions...

Trade actually improved (less deficit on goods trade, better surplus on services trade) so this is nothing at all to do with worsening trade. By far the biggest problem and the vast majority of the deficit jump is the big drop in the surplus in investment income. Note that it's still a surplus, just a smaller one. What is that part of CAB? It's what we get paid in dividends and return on direct investment abroad.

Even the whole idea of panic about deficits stems from people who do not realize the difference between global macroeconomics and a familt budget. Running a CAB deficit as a nation essentially means we favor investment over savings, building up DFI so that surplus that dropped like a rock increases later, and that we use our wealth to buy imported goods from people who desire US $. Ironically, a reduction in income surplus if continued would be exactly what most DU doomers would want as it means we are investing less in foreign nations.

It's all in the snip, but people just jump to silly conclusions thinking a) deficits are automatically bad and b) they have to do with trade alone.

CAB = exports-imports+incomefrom abroad+transfers