The U.S. current account deficit
widened to a record $144.9 billion in the first quarter as
companies imported more to meet the demands of a stronger
economy, a government report showed.
The deficit, the broadest measure of trade because it
includes investments, follows a $127 billion gap in the previous
three months, the Commerce Department said in Washington. The gap
is equivalent to 5.1 percent of the nation’s $11.5 trillion
economy, up from 4.6 percent in the fourth quarter.
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Imports to the U.S. are rising after the economy grew 5
percent in the first quarter from the same three months of 2003,
the biggest increase since 1984. The nation has to borrow about
$1.6 billion a day from foreigners to finance the current account
shortfall. Failure to do so would cause the value of the dollar
to drop and interest rates to rise, economists said.
“Over time there may be a lack of confidence on the part of
foreigners that the U.S. will be able to pay back these ever-
widening deficits,” said John Shin, an economist at Lehman
Brothers Inc. in New York. Until then, “the U.S. is still widely
perceived as the place to invest, and there isn’t much
competition from the rest of the world.”
Economists had forecast a first-quarter deficit of $141
billion, according to the median of 42 estimate in a Bloomberg
News survey, from an initially reported $127.5 billion shortfall
in the last three months of 2003. The previous record deficit was
$138.2 billion in the first quarter of last year.
Bloomberg News
