The US current account deficit narrowed in the second quarter to $195.7 billion as government transfers declined and the surplus on services grew, but the previous quarter's record deficit was revised higher.
The quarterly shortfall, the second highest on record, compared with Wall Street forecasts for a deficit of $193 billion. The Commerce Department revised the first quarter gap to a record $198.7 billion versus a $195.1 billion deficit initially reported.
The current account, the broadest measure of US trade with the rest of the world as it includes investment flows, ran at 6.3 per cent of gross domestic product in the second quarter compared with 6.5 per cent in the previous three months, a Commerce Department official said.
Economists warn such levels represent a serious imbalance in the US economy, reflecting high levels of US consumption but an extremely low savings rate. This leaves foreign investors to finance the gap and is seen as an unsustainable in the long run.
The dollar has been plagued in recent years by concerns over the current account deficit, although it has appreciated from lows hit last year and has been steady in recent months.
Net foreign owned assets in the United States rose in the second quarter to $393.1 billion from $243.5 billion in the first quarter.