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The Current Account

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Analysts often refer to the current account as a broad measure of our country’s international trade position, although it includes a few nontrade items. Trade flows still make up its largest category by far, and our current-account deficit tends to mimic the shortfall in our goods trade. By contrast, the U.S. maintains a $20 billion surplus in services trade. After expanding between 1988 and 1994, this surplus flattened out. The persistent small deficit in unilateral transfers, which are essentially gifts, reflects our country’s largesse. Investment receipts, the final category within the current account, shifted into deficit in 1997, a sign that interest and dividend payments on U.S. obligations to foreigners exceed earnings on our holdings of foreign obligations.

Suggested citation: "The Current Account," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-07, pp. 19, 07.01.1999.

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