FROM 1971 TO 1982 THE U.S. current account balance as a share of U.S.
GNP averaged roughly zero.1 Starting in 1983, however, the United States
experienced increasingly large current account deficits, which reached
3.3 percent and 3.4 percent of GNP in 1986 and 1987, respectively. This
tendency toward larger deficits was reversed gradually during the rest of
the decade, and by 1991 the current account was near zero again. But starting
in 1993 the current account again began to record increasingly large
deficits, which grew to 3.6 percent of GNP in 1999 and 4.4 percent in
2000. This history of the current account prompts several questions: What
is the source of the large current account deficits of the 1990s? Are they
likely to remain with us indefinitely? If not, should we expect them to fade
away slowly as they did in the 1980s? Or should we expect instead a sharp
reversal in the near future?