The oversized trade deficit in the fourth quarter was supposed to have fed a spike in the nation's current account deficit which, at $112.4 billion vs a revised $116.0 billion in the third quarter, instead came in much smaller than expected.
Cross-border financial flows made the difference as the surplus on primary income, at $61.5 billion, was $19.9 billion larger than the third quarter. The trade gap was in fact very large, at $132.3 billion and up $16.1 billion from the third-quarter which benefited from a jump in soy bean exports. The nation once again posted a large surplus in service exports, $1.4 billion higher at $63.8 billion.
This is a positive report that underscores some of the nation's strengths, such as services and financial securities. As a percentage of GDP, the current account edged down 1 tenth to 2.4 percent which is the lowest since third quarter 2014. This ratio edged over 3.0 percent early in the recovery.
The current account deficit is expected to widen sharply in the fourth quarter, to $129.0 billion from $113.0 billion in the third quarter and reflecting the sharp widening in the trade deficit during the quarter. The account deficit relative to GDP has been moderate, at 2.4 percent in the third quarter.