US trade deficit rose to $124.1 billion in fourth quarter of last year

WASHINGTON — The US current account deficit widened in the fourth quarter of last year to its highest level in three years, as exports slumped and foreigners slowed investments in dollar-based assets, the Commerce Department said Wednesday.

The broad measure of US international transactions registered a shortfall of $124.1 billion during the October through December period, or 3.2 percent of gross domestic product (GDP).

Economists surveyed by Dow Jones Newswires had forecast a deficit of $115 billion last quarter.

The expansion in the current account gap followed a contraction in the third quarter to $107.6 billion. The third-quarter deficit, which at 2.8 percent was the lowest percentage of GDP in two years, was revised down from an original estimate of $110.3 billion.

For the full year, the current account gap — which measures mostly trade in goods and services but also includes transfer payments and investment income — narrowed modestly in GDP terms to 3.1 percent from 3.2 percent in 2010.

The fourth-quarter trade gap increased to $141.1 billion from $134.7 billion in the third quarter, as higher oil prices and imports of capital goods like airplanes helped to reverse some of the recent improvement in the deficit.

A decline in the surplus on income on US-owned assets abroad also contributed to the higher current account gap, falling to $50.3 billion from $60.6 billion.

The country’s huge trade deficit means the US must attract large amounts of financing from abroad, or the dollar will lose its value.

Commerce reported Wednesday that net financial inflows to the US were lower, decreasing to $48.6 billion in the fourth quarter from $153.7 billion in the third.

Foreigners bought a net $78.7 billion of US. Treasury securities in the final quarter of 2011, after buying $118.9 billion in the previous quarter.

Net sales of US corporate bonds rose to $31.3 billion from $9.7 billion, while net selling of US stocks by foreigners decreased to $17.1 billion from $28.3 billion in the third quarter.

Foreigners bought a net $11.0 billion of federal agency bonds, after buying $12.5 billion in the third quarter.

Foreign direct investment in the US increased to $78.3 billion last quarter from $67.6 billion the previous period.

The Commerce report can be found at www.bea.gov/newsreleases/rels.htm.