US current account deficit widened to $226.8 bln in Q1, up $5.8 bln (2.6%) from
a revised $221.1 bln in Q4, and rose to 2.9% of GDP from 2.8%. The increase was
not trade-driven: the goods trade deficit narrowed and goods and services
exports jumped $50 bln to $1.38 tln. The main drag was primary (investment)
income, which swung from a Q4 surplus to a Q1 deficit, signaling changes in
relative returns between US residents’ foreign assets and foreigners’ US assets
and higher financing costs for an increasingly imbalanced international balance
sheet. Annual revisions were large: Q4’s deficit was revised from an initial
-$190.7 bln to -$221.1 bln, and the net international investment position was
adjusted by nearly $6 tln.
