Last week, the Bureau of Economic Analysis (BEA) reported Q3 international transactions. The current account is comprised of credits (exports, income) and debits (imports, costs) between the US and other international economies. On a quarterly basis, these flows are very large, with more than $1 trillion moving out of the US and almost as much coming back in, for a net deficit (the current account deficit) of $124bn. That deficit isn’t too big relative to GDP, but it’s interesting to look at what goes into it instead of focusing on the headline number.

Below we show the various major categories by type.  As shown, trade (exports and imports) is much larger than any other category and goods are the biggest factor in trade.  Most changes come from this group of transactions, with industrial and capital goods the largest by far.  Consumer goods, even including autos and parts, are less important than goods purchased for business consumption.  Primary income is earned abroad: for instance, the income of US direct investments, employee wages and salaries, and portfolio income on securities’ dividends or coupons. Secondary income is generally transfers like remittances or foreign aid.  Sign up for Bespoke’s “2020” special and get our Bespoke Report 2020 Market Outlook and Investor Toolkit.

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