403
Sorry!!
Error! We're sorry, but the page you were looking for doesn't exist.
U.S. Posts Sharp Decline in Current Account Deficit
(MENAFN) America's current account deficit shrank sharply in the final quarter of 2025, tumbling 20.2% from the prior quarter to $190.7 billion — its leanest reading since early 2021 — as fresh data from the Bureau of Economic Analysis released Wednesday revealed a trade and income picture that decisively outpaced Wall Street expectations.
Analysts had braced for a $211 billion shortfall in Q4 2025. Instead, the deficit came in well below that threshold, offering a rare bright spot for the broader US economic outlook.
The improvement was even more striking when set against a revised Q3 2025 figure, which the Bureau of Economic Analysis adjusted upward to $239.1 billion from an initially reported $226.4 billion — widening the quarterly swing to $48.4 billion.
As a share of gross domestic product, the deficit contracted to 2.4% in Q4, down meaningfully from 3.1% in the preceding quarter.
The Bureau of Economic Analysis pointed directly to shifting income flows as the key driver behind the improvement. "The $48.4 billion narrowing of the current-account deficit in the fourth quarter reflected a shift in the balance on primary income from a deficit in the third quarter to a surplus in the fourth quarter and a reduced deficit on goods," the bureau said in a statement.
On the export side, combined goods, services, and income receipts climbed $32.4 billion to reach $1.33 trillion, buoyed by stronger goods shipments and higher primary income receipts from abroad. Meanwhile, total imports and income payments to foreign residents eased by $16 billion to $1.52 trillion, pulled lower by declining goods imports and reduced primary income payments.
Capital flow data showed minor shifts: capital transfer receipts dipped $80 million to $101 million, while capital transfer payments surged $1.8 billion to $3 billion.
On the financial account, net transactions registered negative $135.9 billion, reflecting continued US net borrowing from overseas. American investors expanded their foreign financial holdings by $405 billion during the quarter, though US liabilities to foreign residents climbed by a larger $532 billion.
The country's net international investment position stood at negative $27.54 trillion at year-end, fractionally improved from a revised negative $27.55 trillion at the close of Q3. Total US assets were recorded at $42.96 trillion, against liabilities of $70.49 trillion.
Analysts had braced for a $211 billion shortfall in Q4 2025. Instead, the deficit came in well below that threshold, offering a rare bright spot for the broader US economic outlook.
The improvement was even more striking when set against a revised Q3 2025 figure, which the Bureau of Economic Analysis adjusted upward to $239.1 billion from an initially reported $226.4 billion — widening the quarterly swing to $48.4 billion.
As a share of gross domestic product, the deficit contracted to 2.4% in Q4, down meaningfully from 3.1% in the preceding quarter.
The Bureau of Economic Analysis pointed directly to shifting income flows as the key driver behind the improvement. "The $48.4 billion narrowing of the current-account deficit in the fourth quarter reflected a shift in the balance on primary income from a deficit in the third quarter to a surplus in the fourth quarter and a reduced deficit on goods," the bureau said in a statement.
On the export side, combined goods, services, and income receipts climbed $32.4 billion to reach $1.33 trillion, buoyed by stronger goods shipments and higher primary income receipts from abroad. Meanwhile, total imports and income payments to foreign residents eased by $16 billion to $1.52 trillion, pulled lower by declining goods imports and reduced primary income payments.
Capital flow data showed minor shifts: capital transfer receipts dipped $80 million to $101 million, while capital transfer payments surged $1.8 billion to $3 billion.
On the financial account, net transactions registered negative $135.9 billion, reflecting continued US net borrowing from overseas. American investors expanded their foreign financial holdings by $405 billion during the quarter, though US liabilities to foreign residents climbed by a larger $532 billion.
The country's net international investment position stood at negative $27.54 trillion at year-end, fractionally improved from a revised negative $27.55 trillion at the close of Q3. Total US assets were recorded at $42.96 trillion, against liabilities of $70.49 trillion.
Legal Disclaimer:
MENAFN provides the
information “as is” without warranty of any kind. We do not accept
any responsibility or liability for the accuracy, content, images,
videos, licenses, completeness, legality, or reliability of the information
contained in this article. If you have any complaints or copyright
issues related to this article, kindly contact the provider above.
Most popular stories
Market Research
Comments
No comment