U.S. economic reports released Tuesday, July 13, showed that the trade deficit grew in May to more than $42 billion and the federal government ran a budget deficit of $68 billion in June.
The trade deficit, at its widest gap in nearly two years, rose on higher imports of consumer goods. The budget deficit, while still massive at a little more than $1 trillion for the first nine months of fiscal 2010, stood at $68 billion in June, 27% less than the same time a year ago.
Imports rose to $194.5 billion versus exports of $152.3 billion, the U.S. Census Bureau said in its foreign trade report for May. The $42.3 imbalance is the largest since November 2008, when the trade gap stood at $43.8 billion.
Analysts, whose consensus figure for May was $39 billion on the heels of April’s $40.3 billion, were taken by surprise by the trade report.
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“With the oil imports declining by $1.3 billion, all the damage was in the core. Exports and imports both rose, continuing the trend of the past year or so, but the level of imports is so much higher than that of exports that the latter need to generate much bigger percentage increases just to keep the deficit steady. The reverse was true in May so the non-oil deficit jumped by a hefty $4.8 billion,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., in Valhalla, New York, in an analyst note.