Debticit

U.S. Current-Account Gap Widens to Record $225.6 Bln (Update2) By Joe Richter

[A]nd the country paid more interest to overseas investors.

The shortfall in the current account, the broadest measure of trade because it includes transfer payments and investment income, followed a revised $217.1 billion second-quarter gap, the Commerce Department said today in Washington.

The gap amounted to 6.8 percent of the economy, the second- biggest proportion ever, up from 6.6 percent in April to June, according to Commerce Department figures. The deficit reached an all-time high of 7 percent of gross domestic product in 2005's fourth quarter.

U.S. investors received less income on their holdings of overseas investments than foreigners received here. [Which is a roundabout way of saying they earn more off us than we earn off them, which is not exactly the rosy picture we get from those who say the deficit doesn't matter because we have all those overseas factories making money for us over there.]

Income on overseas assets held by U.S. investors rose to $160.8 billion from $156 billion. Foreign earnings on U.S. assets, including wages and other compensation, rose to $164.6 billion....

That [still] left $3.8 billion deficit on income payments, the largest ever, compared with a $2.2 billion shortfall in the second quarter.

U.S. government payments to foreigners and other private transfers abroad registered a $21.5 billion deficit, compared with the $21.9 billion deficit in the prior quarter.