Matthew C Klein, Columnist

U.S. Takes the Spendthrift Cure

The current account deficit has narrowed a lot since 2006. Here's why.

April 10, 2014 at 9:19 PM UTC

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

Oil exports don't explain most of the U.S.'s current account balance improvement. Photographer: Matthew Staver/Bloomberg

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The U.S. current account balance has had a remarkable turnaround over the past eight years. In mid-2006 the deficit peaked at about $858 billion, or more than 6 percent of gross domestic product. Since then, it has plunged to $325 billion, or less than 2 percent of GDP. What happened?