U.S. Markets

U.S. current account deficit widens to 2.5 percent of GDP

FILE PHOTO: A money changer holds U.S. dollar bills at a street in downtown Lima, Peru, December 15, 2017. REUTERS/Mariana Bazo

WASHINGTON (Reuters) - The U.S. current account deficit widened in the first quarter, driven by increases in goods imports, the Commerce Department said on Wednesday in a report that also showed U.S. firms paid more than $300 billion in dividends from repatriated earnings.

The Commerce Department said the current account deficit, which measures the flow of goods, services and investments into and out of the country, widened by $8.0 billion to $124.1 billion, or 2.5 percent of national economic output, in the first three months of the year.

Analysts polled by Reuters had expected the current account deficit to widen to $129.0 billion from the previously reported $128.2 billion in the fourth quarter.

The Commerce Department said a tax overhaul passed by Congress in December 2017, which offered a one-time repatriation tax on foreign earnings, led many companies to bring back cash parked abroad.

Companies paid out dividends and other withdrawals of $305.6 billion from foreign receipts, the department said, which far outstripped the amount of this cash which was reinvested domestically.

Reporting by Jason Lange; Editing by Paul Simao