The US current account deficit shrank significantly during the third quarter as exports reached a new high, according to figures released on Wednesday.
The Commerce Department reported that the current account deficit, which monitors the flow of goods, services, and investments into and out of the country, shrunk by 9.1% to $217.1 billion in the most recent quarter. Since the second quarter of 2021, this was the narrowest gap.
In the third quarter, the current account deficit was 3.4% of gross domestic product, a decrease from 3.6% in the second quarter. This was the lowest share in the past two years. The deficit peaked in the fourth quarter of 2005 at 6.3% of GDP.
The U.S. is currently a net exporter of crude oil and petroleum. Despite the persistent size of the deficit, the dollar remains unaffected as the reserve currency.
Exports of goods rose by $7.2 billion to a record $547.0 billion, driven by non-monetary gold and capital goods such as passenger aircraft engines and parts and other industrial gear. But shipments of soybeans and corn declined.
Imports of commodities decreased by $32.5 billion to $818.2 billion, as declines in consumer products and industrial supplies and materials were prevalent. The fall in consumer goods was driven by household appliances and other domestic items.
Against the backdrop of aggressive interest rate hikes by the Federal Reserve, imports have slowed as businesses evaluate their inventory needs in light of a decline in domestic demand.
The resultant reduction in the trade deficit contributed nearly three percentage points to the annualized rate of expansion of gross domestic product in the third quarter, which was 2.9%.
Primary income revenues rose by $15,2 billion to $314 billion, while primary income payments increased by $26,8 billion to $268.4 billion. The increases in both receipts and payments were mostly driven by the Fed’s rate hikes, which boosted interest on loans and deposits.
Due to a decline in general government transfers, primarily fines and penalties, secondary income receipts decreased by $0.8 billion to $42.7 billion. The increase in secondary income payments to $94.9 billion reflects an increase in general government transfers, mostly foreign cooperation.