The U.S. current account deficit increased to a 14year high in the first quarter as an acceleration in economic growth drew in imports, and the gap could remain wide, with the United States leading the global economic recovery from the COVID19 pandemic.
The Commerce Department said on Wednesday the current account deficit, which measures the flow of goods, services and investments into and out of the country, rose 11.8 to 195.7 billion last quarter. That was the largest shortfall since the first quarter of 2007.
Data for the fourth quarter was revised to show a 175.1 billion gap, instead of 188.5 billion as previously reported. Economists polled by Reuters had forecast the current account gap widening to 206.8 billion in the JanuaryMarch quarter.
The current account gap represented 3.5 of gross domestic product last quarter. That was up from 3.3 in the fourth quarter and the largest since the fourth quarter of 2008.
Still, the deficit remains below a peak of 6.3 of GDP in the fourth quarter of 2005 as the United States is now a net exporter of crude oil and fuel.
The wider deficit is likely not an issue for the United States because of the dollars status as the worlds reserve currency. The economy grew at a 6.4 annualized rate in the first quarter. Growth this year is expected to top 7. That would be the fastest growth since 1984 and would follow a 3.5 contraction last year, the worst performance in 74 years.
Imports of goods jumped 39.9 billion to a record 677.0…