Science, Tech, Math › Social Sciences The Basics of the Current Account in Economics Share Flipboard Email Print Chip Somodevilla/Getty Images News/Getty Images Social Sciences Economics U.S. Economy Employment Supply & Demand Psychology Sociology Archaeology Environment Ergonomics Maritime By Mike Moffatt Professor of Business, Economics, and Public Policy Ph.D., Business Administration, Richard Ivey School of Business M.A., Economics, University of Rochester B.A., Economics and Political Science, University of Western Ontario Mike Moffatt, Ph.D., is an economist and professor. He teaches at the Richard Ivey School of Business and serves as a research fellow at the Lawrence National Centre for Policy and Management. our editorial process Mike Moffatt Updated March 17, 2017 The Economics Dictionary defines the balance of the Current Account as follows: 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. In layman's terms, when a country's current account balance is positive (also known as running a surplus), the country is a net lender to the rest of the world. When a country's current account balance is negative (also known as running a deficit), the country is a net borrower from the rest of the world. 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: 2,8981992: -50,0781993: -84,8061994: -121,6121995: -113,6701996: -124,8941997: -140,9061998: -214,0641999: -300,0602000: -415,9992001: -389,4562002: -475,2112003: -519,6792004: -668,074Source: Bureau of Economic Analysis Current Account References Articles on the Current AccountDefinition of the Current Account Continue Reading