U.S. Trade Gap Narrows As Consumer Demand Slows and Energy Exports Climb

July 6, 2022

The gap between how much the U.S. imports and exports narrowed for the second consecutive month as American households spent less on foreign-made goods and exports of energy jumped.

The trade deficit for goods and services shrank 1.3% in May from the month prior, falling to $85.5 billion, down from April’s $86.7 billion, according to the Commerce Department.

Imports for all goods and services rose 0.6% to $314.4 billion, due primarily to higher costs of crude oil and other energy.

Imports of consumer goods fell by $1.5 billion as Americans shift their spending priorities. During the pandemic, Americans splurged on items like furniture and electronics, but are now spending more on services like travel and dining out. This dynamic is further demonstrated by the jump in the import of services, which climbed by $1.8 billion, driven largely by more Americans traveling overseas. 

Exports were up 1.2%, climbing to $255.9 billion primarily due to higher oil and natural-gas exports. Exports of consumer goods and services rose modestly.

Though the trade deficit has narrowed for two consecutive months, it remains much larger than at any point prior to the pandemic.

A narrowing trade deficit will slightly boost economic growth for the U.S. in the second quarter, but the slower pace of trade in categories other than energy is a sign of weakening economic momentum globally.

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