--US Q4 current account gap record $115.3 bln; Q3 $113.1 bln
--US Q4 net private foreign sales of US Treasuries at $9.8 bln
--US Q4 net foreign buys of US stocks/bonds ex-Treasuries $123.9 bln
--US Q4 net foreign direct investment in US $94.4 bln; Q3 $72.7 bln
--US 2000 current account gap widens 31.3% to record $435.4 bln

By Simon Kennedy
Washington, March 15 (BridgeNews) - The U.S. current account deficit widened to a record seasonally adjusted $115.3 billion in the fourth quarter, up 1.9% from the third quarter, the Commerce Department said Thursday. The increase helped boost the gap by 31.3% for the year to an unprecedented $435.4 billion.
* * * Commerce revised the current account deficit for the third quarter to $113.1 billion, from the previously reported $113.8 billion.
The current account, the broadest measurement of U.S. worldwide transactions, comprises goods and services trade, investment income and foreign aid payments.
Its shortfall has been largely ignored by financial markets participants, who echo Treasury Secretary Paul O'Neill in arguing it merely reflects a strong U.S. economy in recent years and the attractiveness of its assets. But the imbalance may soon become a increasing concern as the economy slows and the stock market tumbles. If the economy cools sharply or equities crumble, global money managers may tire of financing the deficit and decide to shift their funds elsewhere, a decision which would risk unsettling the dollar, the inflation-wary Federal Reserve and equities.
Despite the pessimists' outlook, many experts see the deficit topping out soon as the U.S. economy fades and demand from other nations picks up. Moreover, the Commerce Department reported that despite the rise of the deficit, the dollar appreciated 3.0% on a trade-weighted quarterly average basis against a group of seven major currencies.
TRADE STATISTICS
The U.S. goods trade deficit expanded to a record $118.3 billion from a revised $114.7 billion the previous quarter. Merchandise exports declined to $197.1 billion from a revised $200.8 billion in the third quarter. Merchandise imports slipped to $315.4 billion from a revised $315.6 billion in the July-September period.
The services trade surplus widened to $19.4 billion in the fourth quarter from a revised $19.1 billion in the third quarter.
FOREIGN TRANSACTIONS IN TREASURY SECURITIES, STOCKS
Proving foreigners remain keen to buy U.S. assets, net foreign purchases of U.S. stocks and bonds, excluding U.S. Treasury securities, increased to $123.9 billion in the fourth quarter, from a revised $122.4 billion in the third quarter.
Net foreign purchases of U.S. stocks fell to $36.5 billion from a revised $47.8 billion in the prior quarter, Commerce said in separate data on capital transactions that is not reflected in the current account. Net foreign purchases of U.S. bonds hit a record $87.4 billion, up from $74.6 billion in the third quarter. But net foreign sales of U.S. Treasury securities fell to $9.8 billion from $12.5 billion in the third quarter.
Foreign direct investment totaled $94.4 billion in the fourth quarter, up from $72.7 billion in the prior period. Net equity capital inflows doubled to $80.1 billion as a result of numerous acquisitions of U.S. companies by overseas firms, Commerce reported.
Foreign central banks were net sellers of U.S. Treasury securities, disposing of $14.6 billion from October through December. In the third quarter, net sales by "foreign official institutions" were $9.0 billion, Commerce said.
OTHER DETAILS
Income on U.S. direct investment abroad grew to $39.7 billion in the fourth quarter from a revised $37.9 billion in the previous period. Meanwhile, receipts on U.S. portfolio investment abroad climbed to $48.6 billion from $48.1 billion in the preceding quarter.
Foreign aid payments and government pensions sent abroad--also known as unilateral transfers--contributed $15.9 billion to the current-account deficit, up from a revised $12.9 billion in the third quarter.
Copyright 2001 Bridge Information Systems Inc. All rights reserved.