The Commerce Department said Friday that the nation’s current-account deficit widened to $192.6 billion in the first quarter because of higher oil prices and an increase in government transfer payments overseas.
The shortfall in the current account was less than economists’ forecast of $201 billion, held down by an increase in investment income from overseas. It followed a revised fourth-quarter gap of $187.9 billion that was less than previously reported.
The U.S. needs to attract about $2.1 billion a day to fund the gap, making the U.S. economy vulnerable to higher interest rates and a drop in the value of the dollar should foreign investors sour on American assets. Still, stronger economies abroad suggest demand for U.S. exports will continue to strengthen.
“The current account will be smaller in 2007, but it remains very large,” said Jay Bryson, global economist at Wachovia Corp. in Charlotte. “The concern would be if foreigners decide to stop financing U.S. debt, but that’s not happening and foreigners remain pretty good buyers.”
Current account is the broadest measure of trade because it includes transfer payments and investment income. The gap amounted to 5.7 percent of the economy, compared with 5.6 percent in the fourth quarter.
The deficit in trade, which accounts for about 90 percent of the total, was little changed at $176.8 billion last quarter, compared with $176.9 billion in the fourth quarter.
U.S. investors received more income on their holdings of overseas investments than foreigners received here.
For all of 2006, the current-account gap grew to $811.5 billion, the biggest ever, from $754.8 billion the previous year.
