US current account deficit rises in Q2

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WASHINGTON, Sept 18 (AFP): The US current account deficit widened to 183.1 billion dollars in the second quarter of 2008, from a downwardly revised 175.6 billion dollars in the first quarter, the commerce department said yesterday.
The deficit rose due to an increase in the trade deficit on goods and a decrease in the surplus on income, according to the statement.
The deficit on goods increased to 216.3 billion dollars in the second quarter from 211 billion dollars in the first.
The account deficit is the broadest measure of the flow of goods, services and capital in and out of the US. In the second quarter, the deficit totalled 5.1 per cent of the US gross domestic product, up slightly from 5.0 per cent in the first quarter.
Analyst Sal Guatieri of BMO Capital Markets faulted the spike in oil prices for inflating the current trade gap in goods. But Guatieri said he expected the trade balance to improve, since oil prices fell 25 per cent in the second quarter.
According to another expert, University of Maryland business professor Peter Morici, "The trade deficit with China and on petroleum and automotive products account for about 90 per cent of the deficit on trade in goods."
The faulty US energy policy has increased dependence on foreign oil; meanwhile the three domestic car manufacturers-General Motors, Ford and Chrysler-struggle to stay competitive, Morici added.
Income from US-owned assets abroad decreased to 194.1 billion dollars in the second quarter from 199.1 billion dollars in the first quarter.
Foreign residents' acquisitions of US assets slowed significantly in the period from June-August. They increased 26.3 billion dollars, compared to an increase of 459 billion dollars in the first quarter.
US-owned assets abroad also fell to 110.4 billion dollars in the same period, from 260.6 billion dollars in the first quarter.
The United States also slowed its purchases of foreign securities and stocks. It reduced direct investments abroad to 65.5 billion dollars in the second quarter, down from 89.1 billion dollars in the first quarter.
Also Wednesday, the first quarter account deficit was revised to 175.6 billion dollars, from 176.4 billion dollars.
Third quarter account deficit figures will be released December 17.