*EPF404 12/14/00
U.S. Current Account Deficit Hits Another Record in 3rd Quarter
(Record trade deficits reflected in broader measure) (430)
By Bruce Odessey
Washington File Staff Writer

Washington -- The deficit in the U.S. current account, the broadest measure of U.S. transactions with the rest of the world, hit another record in the third quarter as a result of ballooning trade deficits, the U.S. Department of Commerce reports.

In a December 14 press release the department calculated the July-September current account deficit at $113,773 million, up 8.4 percent from the second quarter and up 27 percent from the third quarter of 1999.

The current account measures the combined balances on trade in goods and services, investment income flows, and net unilateral current transfers, which includes foreign aid.

While exports of goods increased in the third quarter of 2000, to $200,385 million, imports increased even faster, to $315,801 million. An increase in petroleum imports even as the volume of imports decreased was attributed to the rise in prices.

The U.S. surplus in services trade shrank somewhat in the third quarter. Deficits increased slightly in investment income flows and unilateral transfers.

In the third-quarter capital accounts, the increase in flow of U.S.-owned assets abroad slowed down; net U.S. purchases of foreign stocks decreased sharply reflecting a drop in exchanges of stock related to purchases of U.S. companies by foreign companies.

The flow of foreign-owned assets to the United States increased at a slower rate in the third quarter overall, but net foreign purchases of U.S. stocks went up sharply.

"The increase was attributable to shifts to net purchases by investors in Caribbean financial centers and in Japan and to an increase in net purchases by investors in Western Europe," the Commerce Department said.

Following are some key figures:

U.S. CURRENT ACCOUNT
Millions of dollars, seasonally adjusted

year 1st qtr 2nd qtr 3rd qtr
1999 2000 2000 2000
BALANCE ON:
Merchandise trade -345,559 -105,838 -110,231 -115,416
Services 80,588 20,721 21,633 18,913
Income -18,843 -4,364 -4,103 -4,518
Unilateral transfers -48,025 -12,024 -12,270 -12,752
-------- ------- ------- -------
Current account -331,479 -101,505 -104,971 -113,773

U.S. CAPITAL AND FINANCIAL ACCOUNT
Millions of dollars, seasonally adjusted

year 1st qtr 2nd qtr 3rd qtr
1999 2000 2000 2000
NET CHANGE IN:
Capital account
transactions -3,500 166 170 165
U.S. assets abroad
(an increase in
capital outflow
is -) -430,187 -178,958 -92,424 -77,204
Foreign assets in U.S.
(an increase in
capital inflow
is +) 753,564 236,535 245,149 200,169

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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