WASHINGTON (AP) — The U.S. current account trade deficit likely narrowed a bit in the July-September quarter but the improvement may not last.
Economists looked for the deficit in the current account to fall 11.8 percent to $103.6 billion in the third quarter, according to a survey by FactSet. The Commerce Department is scheduled to release the report at 8:30 a.m. Eastern on Tuesday.
The current account is the broadest measure of trade. It tracks the sale of merchandise and services between nations as well as investment flows. Economists watch the current account as a sign of how much the United States needs to borrow from foreigners.
In the April-June quarter, the deficit decreased 12.1 percent to $117.4 billion. That was down from a deficit of $133.6 billion in the January-March quarter, which had been the largest in three years.
Many economists predict the deficit will widen in coming quarters, in part because a global slowdown is dampening demand for American exports.
A debt crisis has pushed much of Europe into recession. The region accounts for about one-fifth of U.S. export sales. And other major export markets, including China, India and Brazil, have experienced slower growth.
The current account deficit hit an all-time high of $800.6 billion in 2006. It then shrank after a deep recession reduced U.S. demand for foreign goods by a greater amount than U.S. export sales were dampened. The trade gap began widening again after the recession ended in June 2009.
The deficit in the monthly trade report, which just tracks merchandise and services, increased in October as U.S. exports fell by a larger margin than imports, a development that was seen as a sign that slower global growth was beginning to weigh on the U.S. economy.
The overall economy grew at an annual rate of 2.7 percent in the July-September quarter, but many economists believe growth has slowed to less than 2 percent in the current quarter. They believe that consumers and businesses have grown more cautious about spending and making investments because of the uncertainty over what Congress will do about the "fiscal cliff."
That is the term used for the increases in taxes and spending cuts that will occur automatically in January unless Congress and President Barack Obama reach a budget deal to avert them. Economists have warned that the adverse impact on the economy will be great enough to push the country back into a recession.