The U.S. current-account deficit widened in the first three months of the year to the largest imbalance since late 2008, reflecting a significant increase in imports and a decline in U.S. earnings on overseas investments, the government reported Thursday. The Commerce Department said the deficit in the current account—the broadest measure of trade because it also includes investment flows and foreign aid—jumped 15.7 percent from $118.7 billion in the fourth quarter of 2011 to $137.3 billion in the January-March period. U.S. exports of goods increased 1.6 percent to $388.5 billion, but imports rose a bigger 2 percent to $583 billion, with large gains in shipments of oil, foreign-made cars, and industrial machinery. The U.S. surplus in exports of services—items like financial services and airline tickets—increased, but the surplus in investment income declined. The current-account deficit in 2011 rose to $465.9 billion, up 5.4 percent from 2010 and the biggest imbalance since 2008. Economists believe the deficit will keep increasing this year. The European debt crisis has pushed many countries in the region into recession, meaning they will be purchasing fewer U.S. exports. Further, some major U.S. export markets like China are seeing growth slow this year. The current-account deficit hit a record high of $800.6 billion in 2006. It then contracted after a deep recession reduced demand for imports. The deficit started to widen again after the recession officially ended in mid-2009. Economists watch the current account as an indication of how much money the United States needs to borrow from foreigners.
