*EPF409 09/12/2002
U.S. Current-Account Deficit Hits Another Record in 2nd Quarter
(Higher deficit in goods trade accounts for much of change) (360)

By Bruce Odessey
Washington File Staff Writer

Washington -- The deficit in the U.S. current account, the broadest measure of U.S. economic activity with the rest of the world, jumped 15 percent to a new record in April-June, the Department of Commerce says.

The department reported September 12 that the second-quarter deficit amounted to $129,959 million, up from the previous record $112,454 million in the first quarter.

Accounting for much of the increase was a surge in the trade deficit for merchandise goods, up to $122,640 million in the second quarter from $106,424 million in the first.

Also, the deficit on investment income jumped to $6,286 million in the second quarter from $946 million in the first as direct investment payments to foreigners on assets in the United States increased.

In the financial account, which reflects activity in the current account, U.S.-owned assets abroad increased $140,833 million in the second quarter, up from a $25,918 million increase in the first; U.S. banks made more foreign loans, and U.S. investors bought more foreign securities than they sold after a net sell-off in the first quarter.

Foreign-owned assets in the United States increased $221,213 million in the second quarter, up from $113,496 million in the first. While net foreign purchases of U.S. stocks dropped by half in the second quarter from the first, net foreign purchases of U.S. bonds rose to a record $92,300 million, up from $46,100 million, with a notable increase in non-Treasury U.S. government bonds purchases.

In the second quarter the U.S. dollar depreciated 4 percent on a trade-weighted quarterly average against a group of seven major currencies.

Following are some key figures:

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

year 4th qtr 1st qtr 2nd qtr
2001 2001 2002 2002
BALANCE ON:
Merchandise trade -427,165 -100,663 -106,424 -122,640
Services 68,875 12,635 10,932 12,027
Income 14,382 6,521 -946 -6,286
Unilateral transfers -49,463 -13,579 -16,016 -13,060
-------- ------- ------- -------
Current account -393,371 -95,086 -112,454 -129,959

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

year 4th qtr 1st qtr 2nd qtr
2001 2001 2002 2002
NET CHANGE IN:
Capital account
transactions 826 205 208 200
U.S. assets abroad
(an increase in
capital outflow
is -) -370,962 -100,088 -25,918 -140,833
Foreign assets in U.S.
(an increase in
capital inflow
is +) 752,806 250,797 113,496 221,213

(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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