The current account balance is the difference between a country's savings and its investment. "[If the current account balance is] positive, it measures the portion of a country's saving invested abroad; if negative, the portion of domestic investment financed by foreigners' savings."
The current account balance is defined by the sum of the value of imports of goods and services plus net returns on investments abroad, minus the value of exports of goods and services, where all these elements are measured in the domestic currency.
The U.S. current account balance has been in a deficit position since 1992 (see chart), and that deficit has been growing. Thus the United States and its citizens have been borrowing heavily from other countries such as China. This has alarmed some, though others have argued that it means eventually the Chinese government will be forced to raise the value of its currency, the yuan, which will help alleviate the deficit. For the relationship between currencies and trade, see A Beginner's Guide to Purchasing Power Parity (PPP).
U.S. Current Account Balance 1991-2004 (in Millions)1991: 2,898
Source: Bureau of Economic Analysis
Current Account ReferencesArticles on the Current Account
Definition of the Current Account