Economy

U.S. Current-Account Deficit for Q1 2019 Declines Sharply from Q4 2018

Q1 2019 Missed Forecast as Q4 2018 Revised Sharply Higher to $-143.9 B

Current account balance concept: painted green text Current Account on digital data paper background with currency. (Photo: AdobeStock)

The U.S. current-account deficit fell to $130.4 billion (prelim) in the first quarter (Q1) of 2019 from a revised $143.9 billion in Q4 2018. As a percentage of U.S. gross domestic product (GD), the deficit fell to 2.5% from 2.8%.

The previously published current-account deficit for Q4 2018 was $134.4 billion. The $13.5 billion drop in the current-account deficit largely reflects a decline in the deficit on goods. That was partly offset by an increase in the deficit on secondary income.

Indicator	Prior	Prior Revised	Consensus Forecast	Forecast Range	Actual
Current Account	$-134.4 B	$-143.9 B	$-124.3 B	$-129.0 B to $-118.0 B	$-130.4 B

Exports of goods and services and income receipts rose $7.2 billion in Q1 2019 to $945.9 billion, while imports of goods and services and income payments fell $6.3 billion to $1.08 trillion.

Largely the result of the Tax Cuts and Jobs Act (TJCA) — President Donald Trump’s signature legislative achievement and the first overhaul to the U.S. tax code in 31 years — dividends were $100.2 billion, while reinvested earnings were $40.2 billion in Q1 2019.

	Q1^r	Q2^r	Q3^r	Q4^r	Q1^r	Q2^r	Q3^r	Q4^r	Q1^p
	2017	2017	2017	2017	2018	2018	2018	2018	2019
Direct Investment Earnings	114.7	115.4	122.2	130.7	134.3	139.4	139.2	134.0	140.5
Dividends	38.2	34.9	55.1	26.9	285.9	223.8	120.2	146.6	100.2
Reinvested earnings	76.5	80.5	67.1	103.8	−151.6	−84.4	18.9	−12.6	40.2
p Preliminary \| r Revised

A sharp narrowing of the U.S. trade deficit, particularly the goods deficit, has driven the stronger than expected annualized rate for the advance and second estimate on Q1 2019 GDP.

The politically-sensitive U.S.-China trade deficit declined $22.9 billion to just over $80.9 billion in Q1 2019.

International Transactions Accounts (Q4 2018)	Preliminary	Revised
Current-account balance	−134.4	−143.9
Goods balance	−233.1	−232.3
Services balance	66.1	61.2
Primary-income balance	60.4	60.1
Secondary-income balance	−27.8	−32.8
Capital-account balance	8.9	2.7
Net lending (+)/borrowing (–) from financial-account transactions	−168.3	−161.6

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PPD Business Staff

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.