*EPF410 03/14/2002
U.S. Current Account Deficit Increases Slightly in 4th Quarter
(Deficit for year down, though, reflecting recession) (450)

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 -- increased in the fourth quarter of 2001 but decreased from 2000 to 2001, the U.S. Department of Commerce reports.

In a March 14 press release, the department put its preliminary estimate of the fourth-quarter deficit at a seasonally adjusted $98,835 million, up slightly from a revised estimate of $98,531 million for the third quarter.

For the year, the department said the deficit amounted to $417,429 million, down from $444,667 million in 2000 for the first annual decrease since 1995.

The annual decrease reflected the drop in the trade deficit for goods as U.S. imports fell during the recession.

In the financial account, which reflects changes in the current account, net recorded inflows came to $157,346 million in the fourth quarter, up from $40,275 million in the third. These inflows equal net acquisitions by foreign residents of assets in the United States minus net acquisitions by U.S. residents of assets abroad.

U.S.-owned assets abroad increased $106,460 million in the fourth quarter, up from an increase of $17,443 million in the third.

Foreign-owned assets in the United States increased $263,806 million in the fourth quarter, up from $57,718 million in the third. "U.S. banks borrowed an unusually large amount of funds from foreigners, mostly from offices in the Caribbean and Europe," the Commerce report said.

Foreigners increased their holdings of U.S. Treasury securities by $33,260 million in the fourth quarter after decreasing their holdings by $9,459 million in the third.

"The turnaround in the fourth quarter reflected a desire by foreign investors to increase the quality of their holdings in the midst of a global economic slowdown," the report said.

It said the U.S. dollar appreciated 6 percent in 2001 on a trade-weighted yearly average basis against a group of seven major currencies.

Following are some key figures:


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

year 2nd qtr 3rd qtr 4th qtr
2001 2001 2001 2001
BALANCE ON:
Merchandise trade -426,615 -107,758 -105,541 -100,695
Services 78,805 16,923 27,091 17,480
Income -19,118 -4,967 -7,412 -1,744
Unilateral transfers -50,501 -12,130 -12,669 -13,876
-------- ------- ------- -------
Current account -417,429 -107,932 -98,531 -98,835


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

year 2nd qtr 3rd qtr 4th qtr
2001 2001 2001 2001
NET CHANGE IN:
Capital account
transactions 726 177 182 194
U.S. assets abroad
(an increase in
capital outflow
is -) -439,563 -72,357 -17,443 -106,460
Foreign assets in U.S.
(an increase in
capital inflow
is +) 895,459 226,927 57,718 263,806

(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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