WASHINGTON — The U.S. current-account deficit widened in the first quarter of 2026 as a deterioration in investment-income flows outweighed an improvement in the trade balance, according to data released by the Commerce Department's Bureau of Economic Analysis (BEA) on Wednesday.
The current-account deficit, a broad measure of the nation's transactions with the rest of the world in goods, services, income and transfers, increased by $5.8 billion, or 2.6%, to $226.8 billion in the January-to-March period, the BEA said. Economists surveyed by Reuters had expected the deficit to widen to about $215 billion.
The first-quarter deficit represented 2.9% of U.S. gross domestic product, up from 2.8% in the previous quarter, according to the agency. Revised data showed the fourth-quarter 2025 deficit was $221.1 billion, larger than a previously reported estimate of $190.7 billion.
The BEA said the widening primarily reflected a shift in the primary income balance, which moved to a deficit of $13.3 billion from a surplus of about $3.4 billion in the fourth quarter. Primary income includes earnings from investments such as dividends, interest and direct investment income. Receipts from foreign investments declined while payments to foreign investors rose to a record level, the agency reported.
The increase in the current-account gap came despite an improvement in the trade balance. The trade deficit narrowed to $165.8 billion from $177.3 billion in the previous quarter, partially offsetting the decline in investment-income flows.
According to the BEA, exports of goods and services and income receipts from abroad rose by about $50 billion during the quarter, while imports of goods and services and income payments to foreign residents increased by roughly $56 billion. The agency also reported higher capital-transfer receipts and lower transfer payments.
"The current-account deficit increased $5.8 billion, or 2.6 percent, to $226.8 billion in the first quarter of 2026," the BEA said in its release. The agency attributed the change largely to the shift in the primary income balance.
The report comes as policymakers and investors continue to monitor trade flows, foreign investment trends and broader economic conditions. Separate Commerce Department data released on Thursday showed the U.S. economy expanded at a faster pace in the first quarter than previously estimated, although consumer spending growth was revised lower.
As of Thursday, the United States continued to hold a negative net international investment position, meaning foreign-owned U.S. assets exceeded U.S.-owned assets abroad, according to the BEA.
