The U.S. current account deficit expanded significantly in the second quarter, reaching its highest point in over two years due to a notable increase in goods imports.
The Commerce Department’s Bureau of Economic Analysis reported that the current account deficit, which tracks the movement of goods, services, and investments in and out of the country, grew by $25.8 billion, or 10.7 percent, to $266.8 billion last quarter. This marks the highest level since the first quarter of 2022.Â
Deficit as a percentage of GDP
This deficit accounted for 3.7 percent of gross domestic product (GDP), the highest percentage since the second quarter of 2022, up from 3.4 percent in the previous quarter. Historically, the deficit peaked at 6.3 percent of GDP in the fourth quarter of 2005. Despite this substantial current account deficit, the dollar remains unaffected due to its status as the world’s reserve currency.
Surge in imports
Imports of goods rose by $20.1 billion, reaching $813.9 billion—the highest level since the second quarter of 2022. This increase was largely driven by capital goods, particularly computer accessories, peripherals, and parts, along with computers and semiconductors. Additionally, imports of consumer goods surged, particularly in medicinal, dental, and pharmaceutical products.
Decline in exports
In contrast, goods exports fell slightly by $0.1 billion to $516.7 billion, primarily due to a significant drop in exports of nonmonetary gold, which countered an increase in capital goods, especially computers. The goods trade deficit widened to $297.1 billion, the largest since the second quarter of 2022, up from $276.9 billion in the first quarter.
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