The U.S. current-account deficit fell to a 14-year low in the fourth quarter due to big gains in exports and overseas investment, the government reported Wednesday.
The Commerce Department said the deficit in the current account—the broadest measure of trade, including the flow of goods, services, and investments into and out of the country—was $81.1 billion in the October-December period, down from $96.4 billion in the third quarter. It was the smallest deficit since the third quarter of 1999.
In the fourth quarter, exports of goods rose 1.9 percent to $405.4 billion, driven by higher sales of petroleum and agricultural products. Exports of goods and services rose 2.5 percent to a record-high $785.2 billion. Imports rose only 0.7 percent.
Americans received $206.1 billion in overseas income, mostly from investments, a 4.3 percent increase from the previous quarter. Payments to overseas owners of U.S. assets rose 2.4 percent to $137.8 billion, helping push the U.S. income surplus to $64.4 billion.
The fourth-quarter current-account deficit represented 1.9 percent of gross domestic product (GDP), down from 2.3 percent in the July-September period and the smallest share since the third quarter of 1997. The current-account deficit has shrunk from a peak of 6.2 percent of GDP in late 2005. For all of 2013, the current-account deficit averaged 2.3 percent of GDP, the smallest since 1997.
Two trends have helped narrow the current-account deficit in the past several years. First, the United States has benefited from an oil and natural-gas boom because new drilling technologies have made it feasible to drill in states like North Dakota and Pennsylvania, pushing down the trade deficit by increasing petroleum exports and reducing oil imports.
Second, low U.S. interest rates have reduced the payments foreigners have received on their holdings of U.S. Treasury bonds and other investments. Meanwhile, the payments that Americans receive on overseas investments have risen, increasing the country’s investment surplus.