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The US trade deficit widened for the second consecutive month in May. The reason is that the decline in exports was greater than the decline in imports. This shows that foreign trade has obviously become a brake on economic growth in the second quarter.
The US Commerce Department said the external trade deficit rose 0.8% to $75.1 billion (70 billion euros) in May. At the same time, the department revised the deficit in April to $74.5 billion from the initially reported $74.6 billion. Economists expected the deficit to increase to $76.2 billion in May.
The goods trade deficit widened 0.9% to $100.2 billion, the largest since May 2022. When adjusted for inflation, the goods trade deficit widened 0.5% to $94.5 billion.
Foreign trade has a negative impact on GDP growth
External trade had a negative impact on first-quarter gross domestic product (GDP) growth and was one of the factors causing the pace of expansion to slow to 1.4% from 3.4% in the last three months of 2023.
Exports fell 0.7% to $261.7 billion in May, due to a stronger dollar as a result of rising U.S. interest rates and cooling global demand, while imports fell 0.3% to $336.7 billion.
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