U.S. Current Account Deficit Hits New Record
The U.S. current account deficit hit a record $225.6 billion in Q3, reflecting high oil prices and burgeoning demand for foreign goods. Measured as a percentage of U.S. gross domestic product, the trade gap was the second-highest ever, at 6.8%. The current account measures U.S. trade and investment in goods and services abroad, and its astronomical size -- on an annualized basis, the deficit has tipped $900 billion -- is considered a primary risk to the global economy. The U.S. needs about $2.5 billion a day to finance the deficit, and if investors lose faith in U.S. assets and send their money elsewhere, the dollar might drop sharply and interest rates shoot up. While some believe the deficit has peaked, thanks to lower oil prices and robust exports, other analysts fear that the sheer vastness of the remaining shortfall will keep external financing risk high. U.S. exports increased to $262.1 billion from $252.8 billion, but that gain was offset by imports, which rose to $480.7 billion from $463.4 billion. The trade gap is particularly wide with China, prompting some U.S. legislators to call for higher tariffs and other measures to combat what they consider unfair Chinese currency policies
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