WASHINGTON (AP) — A drop in U.S. exports and lower income from overseas investments drove the U.S. current account deficit to its highest level in 18 months.
The Commerce Department says the deficit jumped to a seasonally adjusted $111.2 billion in the January-March quarter, up from a revised total of $87.3 billion in the October-December quarter. The fourth quarter's total was the smallest in 14 years.
The current account is the country's broadest measure of trade, covering not only goods and services but also investment flows. A wider deficit can act as a drag on growth because it means U.S. companies are earning less from their overseas markets.
Rising petroleum exports have narrowed the gap in recent years, though such exports fell in the first quarter, widening the deficit.
Overall exports dropped to $399.7 billion from $407.1 billion in the previous quarter, according to the report released Wednesday. Exports of food and feeds also fell, mostly because of a drop in soybean exports. Harsh winter weather harmed many U.S. harvests.
A larger trade gap in the first three months of this year cut nearly a full percentage point from growth. Economists now estimate the economy contracted at an annual pace of 2 percent in the first quarter. But they expect growth will resume in the current quarter at roughly a 3.5 percent rate.