Monday, April 15, 2024

US trade deficit increases to $71.2 billion in May

by Associated Press

WASHINGTON (AP) — The U.S. trade deficit widened in May to $71.2 billion as a small increase in exports was offset by a bigger rise in imports.

The Commerce Department reported Friday that the deficit rose 3.1% from the revised April deficit of $69.1 billion The U.S. trade deficit had hit a monthly record of $75 billion in March.

In May, exports of U.S. goods and services rose 0.6% to $206 billion. But that was offset by a 1.3% gain in imports which hit $277.3 billion.

Through the first five months of this year, the U.S. trade deficit totals $353.1 billion, up a sizable 45.8% from the deficit during the same period last year when Americans’ appetite for imported goods was being held back by the pandemic.

This year the improving U.S. economy has increased demand for imports while the rest of the world has been recovering more slowly, dampening demand for U.S. exports. The trade deficit is the gap between what America sells abroad and what the country imports.

The politically sensitive deficit with China rose 1.9% to $26.3 billion in May and totals $130.7 billion in goods trade so far this year. The trade deficit America runs with China is the largest with any country. Then-President Donald Trump waged a widespread trade war with China in an effort to reduce that deficit, which he said was costing millions of American manufacturing jobs.

The rising trade deficit is acting as a drag on economic growth, shaving 1.5 percentage points from growth in the January-March quarter. Even with that drag, the economy, as measured by the gross domestic product, grew at a robust 6.4% annual rate in the first three months of this year.

Economists believe trade will be less of a drag in the April-June quarter and they are forecasting that GDP growth could hit a sizzling 10% growth rate in the second quarter.

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