The U.S. trade deficit widened sharply in May as an artificial intelligence investment boom helped to drive imports of capital goods to a record high, suggesting that trade remained a drag on gross domestic product in the second quarter.
The trade gap jumped 42.2 per cent to US$77.6-billion, the Commerce Department’s Bureau of Economic Analysis and Census Bureau said on Tuesday. Economists polled by Reuters had forecast the deficit at US$78.5-billion.
Imports increased 3.3 per cent to US$395.3-billion, with imports of capital goods soaring to a record high US$128.0-billion.
Canada posts $4.24-billion trade surplus in May, led by bump in U.S. exports
Businesses are spending heavily on AI, whose buildup is heavily reliant on imports. Exports dropped 3.2 per cent to US$317.7-billion, though shipments of petroleum were the highest on record amid the Middle East conflict. The U.S. is a net oil exporter.
Trade has subtracted from GDP for two straight quarters. The Atlanta Federal Reserve’s model is currently forecasting GDP increasing at a 1.2-per-cent annualized rate in the second quarter. The economy grew at a 2.1-per-cent pace in the January-March quarter.
Leave a Reply
You must be logged in to post a comment.