The U.S. current-account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $66.6 billion, or 29.6 percent, to $291.4 billion in the first quarter of 2022, according to statistics released today by the U.S. Bureau of Economic Analysis (BEA). The revised fourth-quarter deficit was $224.8 billion.
The first-quarter deficit was 4.8 percent of current-dollar gross domestic product, up from 3.7 percent in the fourth quarter.
The $66.6 billion widening of the current-account deficit in the first quarter mostly reflected an increased deficit on goods.
COVID–19 Impact on First-Quarter 2022 International Transactions
All major categories of current-account transactions increased in the first quarter of 2022, the seventh consecutive quarter of broad-based growth following notable COVID–19-related declines in the second quarter of 2020. The full economic effects of the COVID–19 pandemic cannot be quantified in the statistics, because the impacts are generally embedded in source data and cannot be separately identified.
Current-Account Transactions (tables 1-5)
Exports of goods and services to, and income received from, foreign residents increased $25.7 billion to $1.03 trillion in the first quarter. Imports of goods and services from, and income paid to, foreign residents increased $92.3 billion to $1.32 trillion.
Trade in goods (table 2)
Exports of goods increased $13.9 billion to $487.4 billion, mostly reflecting an increase in industrial supplies and materials, primarily petroleum and products. Imports of goods increased $71.1 billion to $829.7 billion, reflecting widespread increases in consumer goods, in industrial supplies and materials, and in capital goods.
Trade in services (table 3)
Exports of services increased $4.3 billion to $217.2 billion, mainly reflecting increases in government goods and services n.i.e. (not included elsewhere), in other business services, primarily professional and management consulting services, and in travel, led by other personal travel. Imports of services increased $5.8 billion to $158.7 billion, mainly reflecting increases in transport, mostly sea freight transport, and in charges for the use of intellectual property, primarily licenses for the use of outcomes of research and development (such as patents and trade secrets).
Primary income (table 4)
Receipts of primary income increased $7.1 billion to $278.6 billion, and payments of primary income increased $10.7 billion to $245.2 billion. The increases in both receipts and payments mostly reflected an increase in portfolio investment income, primarily equity securities and interest on long-term debt securities.
Secondary income (table 5)
Receipts of secondary income increased $0.5 billion to $43.6 billion, mostly reflecting an increase in general government transfers, primarily taxes on income and wealth. Payments of secondary income increased $4.7 billion to $84.7 billion, reflecting increases in general government transfers, mostly international cooperation, and in private transfers, mostly insurance-related transfers.
Capital-Account Transactions (table 1)
Capital-transfer payments increased $0.2 billion to $2.1 billion in the first quarter, mostly reflecting an increase in U.S. government investment grants.
Financial-Account Transactions (tables 1, 6, 7, and 8)
Net financial-account transactions were −$277.5 billion in the first quarter, reflecting net U.S. borrowing from foreign residents.
Financial assets (tables 1, 6, 7, and 8)
First-quarter transactions increased U.S. residents' foreign financial assets by $343.1 billion. Transactions increased portfolio investment assets, mainly long-term debt securities and equity, by $203.1 billion; direct investment assets, primarily equity, by $115.2 billion; other investment assets, primarily loans, by $23.9 billion; and reserve assets by $0.9 billion.
Liabilities (tables 1, 6, 7, and 8)
First-quarter transactions increased U.S. liabilities to foreign residents by $626.4 billion. Transactions increased other investment liabilities, mostly loans and deposits, by $293.8 billion; portfolio investment liabilities by $239.0 billion, resulting from large and partly offsetting transactions in debt and equity securities; and direct investment liabilities, mostly equity, by $93.5 billion.
Financial derivatives (table 1)
Net transactions in financial derivatives were $5.8 billion in the first quarter, reflecting net U.S. lending to foreign residents.
Annual Update of the International Transactions Accounts
The statistics in this release reflect the annual update of the U.S. International Transactions Accounts (ITAs). A summary of the revisions to high-level aggregates is shown in table 9. With this update, BEA has incorporated newly available and revised source data for 2019–2021 and updated seasonal adjustments for 2017–2021 for most statistical series. In addition, there are three updates that are beyond the scope of updated source data and seasonal adjustments:
- Transactions and income for short-term portfolio investment assets for 2012–2021 were revised to incorporate improved methodology and source data for foreign commercial paper and other short-term securities.
- Financial services exports and imports and related withholding taxes in secondary income receipts and payments for 2015–2021 were revised to incorporate the results of BEA's 2019 Benchmark Survey of Financial Services Transactions Between U.S. Financial Services Providers and Foreign Persons.
- Transactions and income for long-term portfolio investment assets and liabilities for 2019–2021 were revised to address a large series break in long-term portfolio investment holdings' source data. Sourced from the monthly "Aggregate Holdings of Long-Term Securities by U.S. and Foreign Residents" (SLT), data show respondents reported unusually large revisions in June 2021. For more information about the SLT revisions, see footnote 5 in the "Footnotes and Notices" section of "Securities (B): Portfolio Holdings of U.S. and Foreign Securities."
With this annual update, BEA has also introduced several new standard ITA tables into BEA's Interactive Data Application and Data Application Programming Interface. Several existing standard table presentations have also been modified. These tables are described below.
Tables 4.6 and 6.3, which were introduced in December 2021 with statistics on U.S. special purpose entities (SPEs), have been expanded to include foreign SPEs. SPEs are legal entities with little or no employment or physical presence. Table 4.6 presents primary income on direct investment in foreign and U.S. SPEs, and table 6.3 presents financial transactions for direct investment in foreign and U.S. SPEs.
Quarterly statistics on direct investment by country and industry, which previously were available in supplemental Excel files on BEA's website, have been incorporated into the standard presentation of the ITAs in new tables 4.5 and 6.2. Table 4.5 presents international transactions in primary income on direct investment by country and industry, and table 6.2 presents international financial transactions for direct investment by country and industry.
Table 2.2, which presents seasonally adjusted trade in goods by selected countries and areas, and table 3.2, which presents seasonally adjusted trade in services by selected countries and areas, have been expanded to include Australia, Belgium, Ireland, Israel, Malaysia, the Netherlands, Switzerland, and Vietnam. In addition, table 2.3, which presents not seasonally adjusted trade in goods by selected countries and areas, has been expanded to include Vietnam.
More information on the annual update is available in "Preview of the 2022 Annual Update of the International Economic Accounts" in the April 2022 Survey of Current Business, and additional information will be provided in July. The U.S. International Economic Accounts: Concepts and Methods has also been updated to reflect changes implemented with this annual update.