US current account trade deficit narrows to $119.9 billion

WASHINGTON – The deficit in the nation’s broadest measure of trade fell in the second quarter to the smallest amount since the final three months of last year.

The Commerce Department says the current account trade deficit declined to $119.9 billion in the April-June quarter, down by 9.1 per cent from a first quarter deficit of $131.8 billion. It was the smallest deficit since the fourth quarter of last year when the deficit totalled $113.4 billion.

The current account is the broadest measure of trade because it covers not only trade in goods but also services and investment flows. Economists closely watch the figure because it indicates how much the United States needs to borrow from foreigners.

The second quarter deficit represented 2.6 per cent of the total economy as measured by the gross domestic product, down from the first quarter when the deficit represented 2.9 per cent of GDP.

The first quarter deficit represented 2.7 per cent of overall economic output, as measured by the gross domestic product, up from 2.5 per cent in the fourth quarter when the deficit totalled $113.4 billion.

The country’s persistent trade deficits have become a flashpoint in the U.S. presidential election. Republican nominee Donald Trump has attacked what he views as defective trade agreements negotiated by past administrations and weak enforcement of U.S. trade laws. Trump says that has allowed countries such as China to take advantage of American companies and workers.

Both Trump and Democratic nominee Hillary Clinton have come out against the Trans Pacific Partnership, a trade deal covering 12 Pacific Rim nations that President Barack Obama hopes to get through Congress before the end of this year.