US Current Account Shortfall Smaller than Expected

The United States current account deficit rose to a seasonally adjusted $246 billion in Q2 2026 from a downwardly revised $212.6 billion in Q1, though coming slightly below the expected $255 billion. The goods shortall increased to $291.3 billion from $250.9 billion, as goods imports (+7.8%) grew more than exports (+4.4%), while the services surplus was little changed at $91.5 billion. Meanwhile, the primary income gap fell to $11.4 billion from $15.8 billion, largely due to an increase in direct and portfolio investment income. At the same time, the secondary income deficit shrank to $34.8 billion from $38 billion, helped by higher general government transfer receipts, particularly fines and penalties, as well as private transfer receipts. The gap reflected a current account deficit of 3% of the US GDP in Q2, up from 2.7% in the prior quarter.

The United States current account deficit widened to a seasonally adjusted $226.8 billion in the first quarter of 2026 from a revised $221.1 billion in the last quarter of 2025. The widening took place despite the presidential administration's vocal efforts to reduce the current account gap in the US through tariffs and the higher turnover of energy exports in March as the war in the Middle East lifted oil, fuel, and gas prices. The primary income account swung to a deficit of $-13.3 billion from a surplus of $3.4 billion in the earlier quarter as debits on investment income rose by over $15 billion, while credits fell by over $3 billion. In turn, the secondary income gap widened to $47.8 billion from $47.1 billion. Tempering a sharper deficit, the goods account deficit narrowed to $250.9 billion from $259.4 billion, while the services surplus widened to $85.1 billion from $82.1 billion.

The United States current account deficit narrowed to a seasonally adjusted $190.7 billion in the fourth quarter of 2025 from $239.1 billion in the previous period, marking the lowest deficit since the first quarter of 2021. The goods deficit narrowed to $241.5 billion from $265.9 billion, as imports contracted more than exports, reflecting the impact of tariffs from the US presidential administration. Additionally, the primary income balance swung to a surplus of $23.9 billion from the deficit of $2.5 billion. In the meantime, the services surplus inched lower to $81.4 billion from $86.5 billion and the secondary income deficit inched down to $54.6 billion from $57.2 billion. The gap reflected a current account deficit of 2.4% of the US GDP in the fourth quarter, narrowing from 3.1% in the third quarter.