WASHINGTON – The deficit in the nation’s broadest measure of trade increased in the January-March quarter to the highest level in more than seven years.
The current account trade deficit jumped 9.9 per cent in the first quarter to $124.7 billion, the Commerce Department reported Thursday. It was the biggest gap since a deficit of $152.5 billion in the fourth quarter of 2008, the height of the financial crisis.
The higher deficit reflected a $9.6 billion decline in the surplus on investment earnings. That offset a $2 billion decrease in the deficit on merchandise trade and an increase of $400 million in the surplus on services.
The current account is the broadest measure of trade because it covers not only trade in goods but also services and investment flows. Economists closely watch the figure because it indicates how much the United States needs to borrow from foreigners.
The first quarter deficit represented 2.7 per cent of overall economic output, as measured by the gross domestic product, up from 2.5 per cent in the fourth quarter when the deficit totalled $113.4 billion.
For all of 2015, the current account deficit totalled $462.97 billion, an increase of 18.1 per cent from 2014.
The rising trade deficits have become a debating point in the presidential election. Presumptive Republican nominee Donald Trump has attacked what he views as defective trade agreements negotiated by past administrations and weak enforcement of U.S. trade laws. Trump contends that has allowed countries such as China to take advantage of American companies and workers.