U.S. current account deficit raised

Touching the second highest level in history, the U.S. current account deficit widened to $218.4 billion in the second quarter from a revised $213.2 billion in the first quarter, as estimated by the commerce department on Monday.

The deficit corresponds to the amount the United States must borrow from foreigners, to cover the underperformance between exports and imports. As the current account covers not only trade in goods and services but also investment flows between countries, it is the broadest measure of foreign trade.

This expansion in the trade gap poses a risk to the economy, if the investors get unpleasant on U.S. assets and branch out to other countries, the dollar may grow weaker and push interest rates higher. But with the economies growing abroad and the costs of imported energy coming down, the deficit may get stabilized.

A sink in the value of the dollar “is a risk rather than something that appears imminent,'' said Nigel Gault, director of U.S. research at Global Insight Inc. in Lexington, Massachusetts. “It looks like the balance is starting to stabilize with economies in the rest of the world doing better, the U.S. economy slowing and oil prices declining.''

The country was put on trail for a fifth consecutive annual deficit, exceeding last year's mark of $791.5 billion, with the deficits through the first six months of this year. October-December period of last year saw the record high for a single quarter with an imbalance of $223.1 billion.

The deficit in goods amplified to $210.6 billion in the second quarter from $208.0 billion in the first. The income deficit widened to a record $4.1 billion in the second quarter, from $2.5 billion in the first.

A record deficit on investment flows of $4.2 billion reflected that foreigners earned more, on their U.S. investments than Americans earned on their overseas investments. The deficit is expected to grow in the coming quarters.