WASHINGTON – The U.S. current account deficit, the broadest measure of trade with foreign countries, shrank in the third quarter to the smallest gap in nearly two years as imports plunged in a weak economy, the government said Wednesday.
The Commerce Department said the deficit fell to $95 billion in the three months ended in September from $107.6 billion in the second quarter. It was the smallest quarterly gap since a $92.5 billion shortfall in the fourth quarter of 1999.
The amount of goods, services and income payments imported into the country sank 8.2 percent to $396.5 billion in the third period. Exports tumbled 6.6 percent to $313.8 billion.
U.S. economists in a Reuters survey had projected the trade gap would shrink to an even smaller $93.8 billion.
Imports of goods fell to $279.6 billion from $293.5 billion. Services imports declined to $41.4 billion from $56.3 billion.
Big drops in travel expenditures and passenger fares contributed strongly to the drop in services imports.
During the decade-long U.S. economic expansion of the 1990s, the ballooning trade deficit triggered concerns that it was unsustainable and risked potentially destabilizing the economy.
But now that the economy is in a recession, demand for electronics, foreign cars and other imports have fallen off, narrowing the gap.
In a recent report, the Paris-based Organization for Economic Cooperation and Development said the value of the dollar would have to fall 20 percent to 30 percent to "permanently" reduce the current account deficit to between one to two percent relative to U.S. gross domestic product in a period of two to three years.