US Current Account Deficit Narrows to $190.7 Billion
The U.S. current account deficit fell to $190.7 billion in the fourth quarter, its lowest since 2021. Higher primary income and lower trade gaps drove the drop.
The United_States current account deficit narrowed significantly in the fourth quarter of 2025, reaching its lowest level in nearly five years. According to the Commerce Department's Bureau of Economic Analysis, the deficit contracted by $48.4 billion, or 20.2%, to settle at $190.7 billion. This figure represents the smallest gap since the first quarter of 2021 and outperformed economist forecasts, which had anticipated a deficit of $211.0 billion. The fourth-quarter deficit accounted for 2.4% of gross domestic product (GDP), a notable decline from the 3.1% recorded in the third quarter. For the full year of 2025, the deficit totaled $1.12 trillion, representing 3.6% of GDP compared to 4.0% in 2024. The release of this report was notably delayed following a government shutdown last year. Trade dynamics have been heavily influenced by shifting tariff policies. After the Supreme Court struck down previous duties, the administration responded by implementing a 10% global tariff, with indications that the rate could rise to 15%. While these measures are defended as necessary to address trade imbalances and protect domestic industries, economists note that approximately 100,000 factory jobs have been lost since January 2025. The narrowing deficit was driven by a sharp swing in the primary income balance, which moved to a $23.924 billion surplus from a $2.539 billion deficit in the previous quarter. Primary income receipts reached a record high of $405.7 billion. Simultaneously, the goods trade deficit narrowed to $241.5 billion as goods exports climbed to a record $563.6 billion, while imports decreased to $805.0 billion.
