The U.S. trade deficit widened sharply in May, according to a report from the Commerce Department’s Bureau of Economic Analysis and Census Bureau cited by Reuters. The trade gap increased by 42.2% to $77.6 billion, while economists surveyed by Reuters had anticipated a deficit of $78.5 billion. Imports rose 3.3% to $395.3 billion, driven by a surge in capital goods imports, which reached a record high of $128.0 billion.
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Businesses are investing heavily in artificial intelligence, a buildup that depends significantly on imported goods. Exports fell 3.2% to $317.7 billion, although petroleum shipments hit an all-time high amid the ongoing conflict in the Middle East. The United States remains a net exporter of oil.
Trade has been a drag on gross domestic product for two consecutive quarters. The Atlanta Federal Reserve’s model currently projects GDP expanding at a 1.2% annualized rate in the second quarter. In the first quarter, the economy grew at a 2.1% pace.
