Current account deficit widens to $137.3B

WASHINGTON�The U.S. current account trade deficit widened in the first three months to the largest imbalance since late 2008, reflecting a big increase in imports in oil, cars and machinery and a drop in U.S. earnings on overseas investments.

The deficit in the current account, the broadest measure of trade, jumped 15.7% to $137.3 billion, up from $118.7 billion in the final three months of last year, the Commerce Department reported Thursday.

U.S. exports of goods increased 1.6% to $388.5 billion, but imports rose a larger 2% to $583 billion.

America's surplus in services, things such as airline tickets and financial services, increased slightly to $43.5 billion but the U.S. surplus in investment income declined by $12.3 billion to $47.6 billion. This change reflected lower payments to Americans on their overseas investments and higher payments to foreigners on their U.S. investments.

The current account is the broadest measure of trade because it tracks the sale of merchandise and services between nations as well as investment flows.

Ttrade deficit gauge worsening

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The deficit in 2011 rose to a revised $465.9 billion, up 5.4% from 2010 and the largest imbalance since 2008.

Economists think the current account deficit will keep rising in 2012. Europe's debt crisis has pushed many countries in that region into recession, meaning they will be buying fewer U.S. exports. In addition, some of America's other major export markets such as China and other emerging economies are seeing their growth slow this year, which will likely cut into U.S. export sales there.

Economists watch the current account as sign of how much the U.S. needs to borrow from foreigners. The deficit in the first quarter totaled 3.6% of the overall economy, up from 3.1% in the fourth quarter. However, it was still well below the all-time high of a deficit that was 6.5% of the total economy in the final three months of 2005.

In total figures, the current account deficit hit an all-time high of $800.6 billion in 2006. It then shrank after a deep recession reduced demand for imports. The gap began widening again after the recession ended in June 2009.

The economy grew at an anemic rate of 1.7% in 2011. Economists had hoped growth would improve this year but they have been marking down their forecasts recently after a string of disappointing reports have indicated that job growth and consumer spending have slowed.