July 7, 2026
The trade deficit for May widened by $23.0 billion to $77.6 billion after having narrowed by $2.0 billion in April. The trade gap was much wider than had been expected as exports declined and imports rose sharply. It should significantly reduce second quarter GDP growth from an expected 2.5% prior to the release to 1.8%.
Exports declined by 3.2% in May to $317.7 billion after having risen by 3.0% in April. In the past year exports have risen 12.6%.
While exports overall declined sharply in May, oil exports have risen in recent months as the war with Iran has curtailed the supply of oil to European countries in particular. The oil surplus has climbed to $17.4 billion.
Imports rose by 3.3% in May to $395.3 billion after having risen by 2.0% in April. In the past year imports have risen by 13.3%. The increase in imports in the past year was widespread.
The trade deficit in real terms widened by $15.8 billion to $100.0 billion after having narrowed by narrowed by $1.6 billion in April..
At the moment we expect trade to subtract about 1.2% from GDP growth in the second quarter. We expect 1.8% GDP growth in that quarter and 2.2% GDP growth for the year as a whole.
Stephen Slifer
NumberNomics
Charleston, SC
Hi Steve,
I’m a bit confused, has the deficit increased so sharply as a result of overall reduced economic activity? Or is there some other factor at play here? Material costs? or? This seems surprising with the general weakness of the dollar.
Best,
Hi Chris what we are have seen in the recent trade data as well as what happened to trade in the first few months of the year were wildly distorted by the recession and subsequent rebound. The dramatic narrowing of the trade gap earlier did not mean a lot. Nor does the recent rebound. I guess the only point I was trying to make is that the increases in both exports and imports tells us nothing more than the rebound is underway with the recovery in the U.S. currently outpacing the rest of the world.
Ah, that makes sense.
Thanks