US current account deficit narrows in fourth quarter

The deficit in the broadest measure of U.S. trade shrank in the final three months of 2016 but the gap for the full year rose to the highest level in eight years.

The Commerce Department said Tuesday that the deficit in the current account shrank to $112.4 billion in the fourth quarter, a drop of 3.1 percent from the $116 billion deficit in the third quarter. The improvement reflected stronger earnings by U.S. investors on foreign holdings, which offset a rise in the deficit on goods.

The current account deficit for all of 2016 rose 3.9 percent to $481.2 billion, the highest annual figure since 2008. The current account is the most complete measure of trade because it covers not only trade in merchandise and services but also investment flows.