Bloomberg reports this morning that the U.S. trade deficit widened in May to “its highest level in nearly three years,” topping all analyst expectations with a 15% MoM growth that totaled $50.2 billion. Not since October of 2008 has the country posted a larger net less in its monthly import-export ledger. Economists expect that the substantial hike in trade debt should be a one month incident, citing higher than usual energy prices and a weak dollar as driving factors. Paul Ashworth, chief U.S. economist at Capital Economic predicted a brighter coming quarter, “Oil has obviously come off, so you’re going to have a significant drop back there. This quarter, trade will certainly make a strong positive contribution to GDP growth. We’ve had rapid growth in developing countries.”
Reportedly the nation’s trading activities in the first quarter of this year added 0.14 percentage points from quarterly GDP growth, wielding a minor, yet tangible impact on the nation’s wider economic health. According to Bloomberg “Imports rose 2.6 percent to $225.1 billion, second only to the record $231.6 billion reached in July 2008. Purchases of food and capital goods produced overseas reached records in May, the report showed.”
A large factor precipitating the record domestic trade imbalance was the price of crude oil in May, which averaged over $108 per barrel, the most expensive energy costs since August of 2008. Exports in the month decreased 0.5 percent to $174.9 billion, the second-highest on record and depressed by a drop in foreign demand for industrial supplies. Purchases of American-made capital equipment were the strongest ever. Analysts expect that a weaker dollar and lower energy prices will contribute to a US trade rebound in the coming months.