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Economic Commentary

Is the Current-Account Deficit Sustainable?

In 1987, after six straight years of large current-account deficits, the United States became a net debtor country. Our deficits have since persisted and our debts have grown—today we owe more than any other country—but the dire consequences predicted by some analysts have not materialized. Old concerns are now reemerging as Asian and Russian financial crises push the U.S. currentaccount deficit to new record levels. It reached $220 billion (annual rate) over the first three quarters of 1998, raising our debts to more than 17 percent of GDP. How long can we continue to service our growing international indebtedness without a sharp hike in U.S. interest rates, a rapid depreciation of the dollar, or some other economic disruption?

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Humpage, Owen F. 1998. “Is the Current-Account Deficit Sustainable?” Federal Reserve Bank of Cleveland, Economic Commentary 10/15/1998.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International