WASHINGTON -- Cheaper oil imports and greater U.S. exports lowered the deficit in the broadest measure of U.S. trade in the April-June quarter.
The Commerce Department said Thursday that the current account deficit shrank to $109.7 billion, down from $118.3 billion in the first quarter. The current account tracks not only trade in goods and services but also investment flows.
Falling oil prices helped reduce the value of oil imports, lowering the trade deficit to $130 billion from $134.3 billion in the first quarter. Exports of goods and services increased to $564.7 billion from $561.7 billion.
The trade gap was a big drag on growth in the first three months of the year, when the economy barely expanded. But the smaller deficit in the second quarter contributed to a much faster expansion.
The economy grew at a 3.7 percent annual pace in the April-June quarter, after growth of just 0.6 percent in the first three months of the year.
But the improvement in the current account deficit may not last, analysts said. U.S. exporters have seen their overseas sales struggle as economies from Europe to China have slowed. The strong dollar is another challenge. It has increased about 14 percent in value in the past year compared with overseas currencies. That makes U.S. goods more expensive overseas and imports cheaper in the U.S.
U.S. investors and companies also earned more on their foreign holdings in the second quarter, the government said. The surplus on investment income rose to $50.6 billion in the second quarter from $49.7 billion in the first.
Americans' expectations for the economy sank to a four-month low in September as households fretted about financial markets and a global economic slowdown.
The measure tracking the economic outlook declined to 44.5 this month from 46 in August, data from the Bloomberg Consumer Comfort Index showed Thursday. The weekly sentiment gauge, which includes current views of the economy, personal finances and the buying climate, dropped in the period that ended Sunday to the second-lowest level since November.
The smallest share of respondents in a year said the economy was getting better, probably a reflection of the slump in stock prices since mid-August. While households were more downbeat last week about the buying climate, Federal Reserve officials may view recent gains in retail sales as a sign that falling gasoline prices and a stronger labor market are underpinning demand, analysts said.
"While gas prices have fallen 34 cents since mid-August and unemployment is its lowest since 2008, wage growth remains stagnant and stock market volatility continues domestically and internationally alike," said Gary Langer, president of Langer Research Associates LLC in New York, which compiles the comfort index for Bloomberg.
Some 36 percent of respondents said they believe the economy is getting worse, the highest share in four months, while 25 percent said it was improving, according to the monthly expectations gauge. The weekly measure of the state of the economy dropped to 30.9, the lowest level since the period ending July 26, from 33.3.
Information for this article was contributed by Christopher S. Rugaber of The Associated Press and by Ali Donaldson of Bloomberg News.
Business on 09/18/2015