Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or to subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.
The trade deficit is at its highest level since late 2022.
The U.S. trade deficit in goods and services rose to a seasonally adjusted $75.1 billion in May, from a downwardly revised $74.5 billion in April. The trade deficit is a measure of the difference between what the U.S. buys from foreign nations and what it sells overseas. The widening in the trade deficit from the previous month came despite both imports and exports falling slightly. The trade deficit has now widened in eight of the past nine months. A resilient U.S. economy and persistent dollar strength are contributing to a wider deficit this year.
Exports fell slightly in May, down 0.8% from the previous month. The decline in exports was driven by a large drop in industrial supplies, specifically petroleum products, fuel oil and gold. However, the decline was broad-based, with modest drops in autos, capital goods and food. Exports of services rose slightly, with travel exports — the spending by visitors to the United States — increasing 4.4% to a new record. Exports have contended with a weaker global economic backdrop and a stronger dollar, which makes U.S. goods relatively more expensive abroad.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Imports are still up year-over-year, as domestic demand continues to normalize. Total imports fell 0.3% in May from the previous month, and while they are not booming, they’re still doing better than exports. Imports are up 6.2% from a year ago, while exports are up 4.3%. Most major categories of imports moved lower in May, but the weakness was concentrated in consumer goods and pharmaceuticals. And even consumer goods imports are still up 5% on a year-ago basis, while continued strong domestic demand remains supportive of growth.
After rising for the first four months of the year, capital goods imports pulled back slightly. Industrial supplies imports bucked the trend in May, rising 2.6% amid a pop in crude oil imports. Imports of services rose to a new record of $67 billion. The trade surplus in services rose to $25.1 billion in May.
Trade will weigh on GDP in the second quarter. May’s data indicate that net exports in the second quarter will be a drag on economic growth. After nearly two years of positive contributions to growth, trade has been a substantial headwind this year. This is primarily due to the continued strength in imports which subtract from net GDP gains.
Source: Department of Commerce, Trade Data
Related content
-
3M Leads Dow Stocks After Massive Earnings Beat3M stock is headed toward its best day ever after the industrial conglomerate's impressive earnings report. Here's what you need to know.
-
Social Security Login Changes Taking Effect Soonmy Social Security accounts created before 2021, are transitioning to the Login.gov platform.
-
Astronomical AI Spending Is Causing Jitters on Wall StreetThe Kiplinger Letter Amid rampant excitement over artificial intelligence, a new round of skepticism is taking hold. Here are four forecasts about the future of generative AI.
-
Car Prices Are Finally Coming DownThe Kiplinger Letter For the first time in years, it may be possible to snag a good deal on a new car.
-
Rising Cyber Threat of AI: The Kiplinger LetterThe Kiplinger Letter Security experts warn that generative AI brings new risks with no clear defenses. With AI's rapid adoption, businesses are vulnerable.
-
Kiplinger Special: The Long-Term Future of the U.S. EconomyThe Kiplinger Letter Kiplinger's report into what it will take the U.S. to maintain a healthy economic growth rate.
-
The Fight Against Cancer Enters a New PhaseThe Kiplinger Letter Breakthrough treatments hold promise for patients and investors.
-
After Decades of Promise, the Virtual Reality Era Has Finally ArrivedThe Kiplinger Letter VR is a paradigm shift for consumer technology. The tech has a long road ahead, but amazing hardware already puts the huge potential on full display.
-
AI to Power the Next Generation of RobotsThe Kiplinger Letter There's increasing buzz that the tech behind ChatGPT will make future industrial and humanoid robots far more capable.
-
The Robots Are Coming... But Not For a While
The Kiplinger Letter There’s excitement in the tech sector over the potential of humanoid robots, but widespread adoption is likely to be years away.
