The 2004 Current Account Deficit

The BEA reported on the US’s current account deficit for 2004. And the winner is… $666 billion, or 5.7% of GDP:

The U.S. current-account deficit–the combined balances on trade in goods and services, income, and net unilateral current transfers–increased to $665.9 billion in 2004 from $530.7 billion in 2003. An increase in the deficit on goods to $665.5 billion from $547.6 billion accounted for most of the increase. Other contributors to the increase in the deficit were a decrease in the surplus on income to $24.1 billion from $33.3 billion, an increase in net outflows on unilateral current transfers to $72.9 billion from $67.4 billion, and a decrease in the surplus on services to $48.4 billion from $51.0 billion. As a share of U.S. GDP, the deficit rose from 4.8 percent in 2003 to 5.7 percent in 2004.

The counterpart to the current account deficit, of course, is an equal capital account surplus. These figures therefore tell us that the rest of the world was willing to lend the US $666 bn in 2004. Not a bad extension of our credit line for an economy that is only enjoying fair to middling economic growth.