Deficit in monthly trade report increased
much of Europe into recession. The region accounts for about onefifth of U.S. export sales. And other major export markets, including China, India and Brazil, have experienced slower growth.
The current account deficit hit an all-time high of $800.6 billion in 2006. It then shrank after a deep recession reduced U.S. demand for foreign goods by a greater amount than U.S. export sales diminished. The trade gap began widening again after the recession ended in June 2009.
The improvement in the current account in the third quarter reflected a decline in the deficit on goods and a small increase in the surplus on services, led by a gain in foreign earnings made by U.S. companies providing financial services, insurance and professional services. The surplus on investment earnings narrowed to $50.8 billion, down from $52.1 billion in the second quarter.
The deficit in the monthly trade report, which just tracks merchandise and services, increased in October as U.S. exports fell by a larger margin than imports, a development that was seen as a sign that slower global growth was beginning to weigh on the U.S. economy.
The overall economy grew at an annual rate of 2.7 percent in the JulySeptember quarter, but many economists believe growth has slowed to less than 2 percent in the current quarter. They believe that consumers and businesses have grown more cautious about spending and making investments because of the uncertainty over what Congress will do about the “fiscal cliff.”
That is the term used for the increases in taxes and spending cuts that will occur automatically in January unless Congress and President Barack Obama reach a budget deal to avert them. Economists have warned that the adverse impact on the economy will be great enough to push the country back into a recession.