August 7, 2022

U.S. Trade Deficit Jumped in May

The Commerce Department report said that exports of goods and services were $174.9 billion, while imports were $225.1 billion, resulting in a deficit of $50.2 billion. That made it the largest trade deficit since October 2008, when it was $59.5 billion, and was up from a revised $43.6 billion in April.

Exports in May were the second highest level on record after the $175.8 billion in April, while imports were the second highest after the $231.6 billion in July 2008.

Still, economists said that exports from the United States were expanding at a good pace, with a lower dollar, increased competitiveness and strong growth in global markets.

“Trade is growing at a very rapid pace,” said Paul Ballew, a former Federal Reserve economist and now the chief economist at Nationwide Insurance. “Emerging markets outside of the U.S. have come back briskly. It is a very uneven recovery but there are pockets of real strength.”

The department said the April-to-May decrease in exports reflected lower sales of industrial supplies and materials; consumer goods; and foods, feeds and beverages. The rise in imports reflected more industrial supplies and materials; capital goods; and automotive vehicles, parts and engines.

The increase in imports reflected mostly $4.3 billion more for industrial supplies and materials and $1.2 billion in capital goods.

Crude oil imports were up more than 10 percent in May because of strong volume and higher prices, totaling $29.4 billion. The deficit in petroleum goods was $30.4 billion, making it the highest since October 2008, when it was $34.5 billion.

Consumer demand in the United States appeared weaker, resulting in a slack growth of less than 1 percent for non-pharmaceutical consumer products. But a rise in capital goods imports could be a good sign for domestic production down the road, economists said.

Foreign trade is expected to raise real gross domestic product growth in the second quarter, although economists expect its contribution to be smaller. Gregory Daco, a United States economist for IHS Global Insight, said that his estimate for trade’s contribution to gross domestic product has declined to 0.6 percent from 1.1 percent, based on the stronger import figures.

“One very surprising element was the rebound in automotive imports,” Mr. Daco said. “We were expecting somewhat of a drag from the disruptions in the supply chain because of Japan. We did not see that.

“That is a sign that automobile production will gradually recover as we import more vehicles and parts.”

The monthly report also showed that the United States trade deficit with China grew to $25 billion in May from $21.6 billion in April, the largest deficit the United States has with any country.

The goods and services deficit increased $8.1 billion from May 2010 to May 2011. Exports were up $22.8 billion, or 15 percent, and imports were up $30.8 billion, or 15.9 percent.

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