US Q1 current account deficit widens; goods trade deficit narrows, but primary income turns to deficit

The proportion of GDP increased slightly from 2.8% to 2.9%. The expansion of the deficit was not caused by trade. In fact, the merchandise trade deficit narrowed, with exports of goods and services jumping by $50 billion to $1.38 trillion. The main drag came from primary income, which shifted from a surplus in the fourth quarter to a deficit in the first quarter. This account reflects the difference between income earned by U.S. residents holding foreign assets and income earned by foreign residents holding U.S. assets. This change reveals a shift in relative returns and shows that the cost of financing increasingly imbalanced balance sheets is rising. Notably, the annual revision was significant. The fourth quarter deficit was revised from the initial -$190.7 billion to -$221.1 billion, and the net international investment position was also corrected by nearly $600 billion.