US DATA
- The current account deficit was once again larger than expected in Q3 at $310.9bn (cons $287.1bn) after an upward revised $275bn (initial $266.8bn) in Q2.
- It leaves a deficit of 4.2% GDP in Q3, the largest since 1Q22 and before that 2008, after a sharp increase from the 3.8% in Q2, 3.4% in Q1 and 3.1% in 4Q23.
- It’s a marked level difference compared to the 2% GDP deficits averaged in the years leading up to the pandemic, and is also currently coinciding with fiscal deficits to the tune of 6-7% GDP.
- The latest quarterly deterioration was broad-based: the goods deficit increased from 4.1% to 4.2% GDP, the investment income balance shifted from 0.0% to a deficit of 0.1% GDP and the secondary income deficit (i.e. transfers) shifted from 0.6% to 0.8% GDP.
- Compared to pre-pandemic levels though, the main difference has been the dwindling in the primary income balance, from surpluses of 1-1.5% GDP to a second consecutive quarterly deficit this time at 0.2% GDP. Prior to Q2/Q3 this year, the primary income balance was last in deficit fleetingly in 1998.
- Investment income is the key driving force here, likely as US assets outperform those overseas.
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