Preview: Due March 25 - U.S. Q4 Current Account - Correction from record pre-tariff deficit extending further
We expect a Q4 US current account deficit of $215bn, down from $226.4bn in Q3 and the narrowest since Q1 2021. As a proportion of GDP the deficit would be 2.7%, down from 2.9% in Q3 and the narrowest since Q1 2020. The correction from the record $439.8bn pre-tariff deficit in Q1 continues.
Monthly trade data on goods and services has already been released through January. The Q4 goods deficit fell to $241.5bn from $265.9bn (revised from $267.4bn in the Q3 current account release). The Q4 services surplus fell to $81.4bn from $86.5bn (revised from $89.1bn in the original Q3 data).
Still to be released are data on primary (investment) income and secondary (unilateral transfers) income. Fed flow of funds data however suggests the former will move back into deficit after a return to surplus in Q3, outweighing a modest narrowing of the deficit in the latter. Still, overall the current account deficit is likely to narrow due to a narrowing of the deficit in goods trade.
