Coming in at 2.7% of GDP, the U.S. trade deficit fell to
$107.5 billion in the third quarter of 2012—down 9 percent from the second
quarter’s $118.1 billion, which was 3% of the economy at the time. The current
account includes merchandise, services, and investment flows. The surpluses in
services and investment were out-done by the deficit in merchandise to produce
the overall trade deficit. According to the New York Times, the “improvement in
the current account in the third quarter reflected a decline in the deficit on
goods and a small increase in the surplus on services, led by a gain in foreign
earnings made by financial services, insurance and professional services
provided by companies in the United States. The surplus on investment earnings
narrowed to $50.8 billion, down from $52.1 billion in the second quarter.” Most
of the decline in the deficit on goods reflected a decline in the foreign oil
bill, according to Paul Ashworth at Capital Economics.
