The US current account is in deficit because the US economy constantly imports more than it exports.
And because no one gives the Americans these goods for free, the US liabilities to foreigners grow faster than the US claims on foreigners, i.e. The US capital account shows a surplus of capital imports over capital exports. In other words, the net debt of the US economy to the rest of the world is growing because the current account is in deficit, Commerzbank’s Head of FX & EM Research Ulrich Leuchtmann notes.
” “Why not? Because since 2010, but especially since 2017, it is not the surplus of capital imports over capital exports in the US that is causing US liabilities to grow faster than US claims. More and more, it is the high capital gains on claims on the US economy. In other words, because US investment by foreigners is highly profitable, US debt is growing so much faster than US claims.
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