Key facts
- The U.S. trade deficit in goods widened by 27.4% to $105.8 billion in May.
- Imports of goods rose $10.9 billion to $313.4 billion, while exports fell $11.8 billion to $207.7 billion.
- The widening deficit could lead economists to cut their second-quarter GDP estimates.
- Trade has negatively impacted GDP for the past two quarters.
The U.S. trade deficit in goods saw a significant increase in May, expanding by 27.4% to $105.8 billion. This widening gap was primarily driven by a substantial rise in imports, which climbed $10.9 billion to $313.4 billion, while exports decreased by $11.8 billion to $207.7 billion.
Economists had anticipated a smaller deficit of $85.0 billion. The surge in imports is partly attributed to businesses stocking up to mitigate potential shortages and price increases linked to the Middle East conflict. This development could prompt economists to lower their projections for second-quarter gross domestic product (GDP).
Trade has acted as a drag on U.S. GDP for the past two consecutive quarters. The economy grew at an annualized rate of 2.1% in the first quarter, following a 0.5% expansion in the final quarter of the previous year. Current estimates for second-quarter GDP growth are converging around a 2.5% annualized rate.