With the revised third quarter GDP numbers now in, as well as the trade data for all three months of the third quarter, let's play everyone's favorite guessing game.
Yes, it's Estimate That Current Account Deficit!
In 2004:III the goods and services balance stands at -$155.7bn. We don't have the figures on unilateral current transfers, but for the last six quarters these came in anywhere between -$16.4bn and -$20.7bn, with the overall trend upwards. Let's be conservative and pick -$18bn. Finally, the balance on income which is the hardest to guess. It fell to a mere +$2.6bn in the second quarter, and with all the news of rising foreign holdings of US debt as well as rising US interest rates relative to those in Europe and Japan, let's do the easy thing and say perfect balance on income for the third quarter. That puts our guesstimate for the current account balance for 2004:III at -$173.7bn, 4.5% larger than in 2004:II.
With 2004:III GDP at a seasonally-adjusted annualized $11,810.0bn in current dollars, we get a current account balance as a percentage of GDP figure of [drum roll, please] . . .
-5.88%!Recall that the CA balance in 2004:II was -5.70% of GDP. I can't help but see the dollar absolutely tank when the third quarter data on the current account is released on December 16. Either that or it provokes a massive intervention by the Bank of Japan -- and perhaps the European Central Bank in tow.
Mark your calendars!
ADDENDUM: John Quiggin has a nice discussion today of CA deficits in Australia specifically, and the Anglosphere in general. This is hardly a strictly American phenomenon.