US Q1 Current Account - Deficit increases on lower investment income surplus
The Q1 current account deficit of $226.8bn is wider than expected, and up from $221.1bn in Q4, with Q4’s deficit revised significantly higher from $190.7bn in the original Q4 release. This is the first increase in the deficit since the record pre-tariff deficit of $438.2bn in Q1 2025.
Goods and services data was as reported in monthly trade data, a deficit of $165.8bn versus $177.3bn in Q4, with Q4’s deficit revised up significantly from $160.0bn. While the overall current account deficit increased, the goods and services deficit is the lowest since Q1 2020.
The main reason for the increase in the deficit was the primary (investment) income balance slipping into deficit at $13.3bn, with Q4’s surplus revised significantly lower from $23.9bn to $3.4bn.
The final component of the deficit, that in secondary (transfers) income saw deficit of $47.8bn, little changed from $47.2bn in Q4, though Q4’s deficit was revised down from $54.6bn.
The Q4 deficit is 2.85% of GDP compared with 2.81% in Q4. This remains well below the 5.83% in Q1 2025 and any annual total since 2020. In 2025 the deficit was 3.83% if GDP, compared with 4.09% in 2024.
