This report in the NYT is notable, not for its content but for the fact that it’s the first time I’ve seen the Times use the term “current account deficit” without some explanatory gloss such as “the broadest measure of the trade deficit”. The NYT is not alone on this – the only other paper I’ve seen even report CAD statistics is the WSJ and it usually has a gloss.

For Australian readers of a certain age, the rise to prominence of the CAD will be all too familiar. The high interest rates of the late 1980s and the ensuing recession were largely motivated by concern about the CAD, though every historical point is bitterly disputed. Even today, no Australian tabloid would have any qualms in reporting the CAD and assuming its readers had a general idea what it was.

As this report from the Bureau of Economic Analysis shows, the CAD is now at 5 per cent of US GDP and shows no sign of declining, despite the recent deprecation of the dollar. Although economists are more relaxed about deficits than they were a decade ago, this is still dangerous territory.

One reason US commentators have ignored the CAD is the fact that, although the US is a net debtor, the deficit on income payments is still quite small – only $3 billion in the last quarter. So the CAD is not much different from the balance on goods and services. But with deficits at 5 per cent of GDP, the magic of compound interest will start to work before long. Expect to see this statistic make the move from the business pages to the front pages in the near future.