WASHINGTON - THE US narrowed its balance of payments deficit with the rest of the world by 3.8 per cent in the third quarter to US$174.1 billion (S$253.4 billion), the Commerce Department said on Wednesday.
The current account deficit, the broadest measure of trade and income flows, showed some improvement because of cash transfers and income flows, and a decline in the deficit on goods.
The deficit, seen as a factor in global imbalances and pressure on the dollar, represented 4.8 per cent of gross domestic product, down from 5.1 per cent in the second quarter, the Commerce Department said.
The deficit on goods and services decreased to US$176.5 billion in the third quarter from 180.1 billion in the second.
'Overall, the deficit is still huge ... but it should continue to decline as the crunch in import demand offsets the dramatic downshift in exports,' said economist Ian Shepherdson at High Frequency Economics.
He said lower oil prices should help ease the trade gap and improve the current account picture.
But Peter Morici, a University of Maryland economist, said the report 'indicates Americans continue to consume much more than they produce, borrow too much from the rest of the world.' 'The current account deficit is nearly entirely caused by the huge deficit on trade in goods,' Mr Morici said.
'In turn, the goods deficit is caused by a combination of an overvalued dollar against the Chinese yuan, a dysfunctional national energy policy that increases US dependence on foreign oil, and the competitive woes of the three domestic automakers.' -- AFP
