Chronicling 100 Years of the U.S. Economy

October 2020
Volume 100, Number 10

U.S. International Transactions

Second Quarter 2020

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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 $59.0 billion, or 52.9 percent, to $170.5 billion in the second quarter of 2020 (chart 1 and table A). This is the largest deficit recorded since the third quarter of 2008, when it was $178.2 billion. The revised first-quarter deficit was $111.5 billion.

The second-quarter deficit was 3.5 percent of current-dollar gross domestic product, up from 2.1 percent in the first quarter.

The $59.0 billion widening of the current-account deficit in the second quarter mostly reflected an expanded deficit on goods and reduced surpluses on primary income and on services.

 

Exports of goods and services to, and income received from, foreign residents decreased $209.3 billion to $688.0 billion in the second quarter (charts 2 and 3 and tables A and B). Imports of goods and services from, and income paid to, foreign residents decreased $150.2 billion to $858.5 billion (charts 2 and 4 and tables A and C).

Trade in goods

Exports of goods decreased $114.6 billion to $288.9 billion, mostly reflecting decreases in industrial supplies and materials, mainly petroleum and products; in capital goods, mainly civilian aircraft, engines, and parts; and in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars. Imports of goods decreased $87.1 billion, to $508.2 billion, mostly reflecting decreases in automotive vehicles, parts, and engines, mainly parts and engines and passenger cars, and in industrial supplies and materials, mostly petroleum and products.

Trade in services

Exports of services decreased $46.3 billion, to $155.8 billion, and imports of services decreased $35.4 billion, to $101.3 billion. The decreases in both exports and imports mostly reflected decreases in travel, primarily other personal travel, and in transport, primarily air passenger transport.

Primary income

Receipts of primary income decreased $47.1 billion, to $209.4 billion, mostly reflecting decreases in portfolio investment income, primarily income on equity securities, and in direct investment income, primarily earnings. Payments of primary income decreased $24.3 billion, to $180.2 billion, reflecting decreases in all components, led by other investment income, primarily interest on loans and deposits.

Secondary income

Receipts of secondary income decreased $1.2 billion, to $33.9 billion, mostly reflecting a decrease in private transfers, primarily private sector fines and penalties. Payments of secondary income decreased $3.4 billion, to $68.8 billion, reflecting decreases in private transfers, primarily private sector fines and penalties, and in general government transfers, primarily international cooperation.

Capital-transfer payments decreased $1.9 billion, to $1.1 billion, in the second quarter, mostly reflecting a decrease in investment grants (table A).

Net financial-account transactions were −$82.6 billion in the second quarter, reflecting net U.S. borrowing from foreign residents.

Financial assets

Second-quarter transactions decreased U.S. residents' foreign financial assets by $147.6 billion (charts 5 and 6 and table D). Transactions decreased portfolio investment assets by $29.8 billion, primarily equity securities, and other investment assets, mostly deposits, by $158.6 billion. Transactions in deposits included a net withdrawal by the U.S. Federal Reserve of $130.8 billion from deposits abroad. Transactions increased direct investment assets, primarily equity, by $35.9 billion, and reserve assets by $5.0 billion.

Liabilities

Second-quarter transactions decreased U.S. liabilities to foreign residents by $4.8 billion. Transactions decreased direct investment liabilities, mainly debt instruments, by $8.5 billion and other investment liabilities, mostly deposits, by $335.2 billion. Foreign banks withdrew $213.0 billion of their deposits in U.S. banks. Transactions increased portfolio investment liabilities, mainly short-term U.S. Treasury securities, by $339.0 billion.

Financial derivatives

Net transactions in financial derivatives were $60.3 billion in the second quarter, reflecting net lending to foreign residents.

The U.S. international transactions statistics for the first quarter have been updated to incorporate newly available and revised source data (table E).