US Goods Trade Deficit Narrows but Still Expected to Weigh on Q2 GDP Growth
The U.S. trade deficit in goods narrowed by 4.2% in June to $101.5 billion, driven largely by a decline in imports amid lower crude oil prices and easing supply chain pressures from the Middle East conflict. However, economists expect that this improvement will not be enough to prevent net trade from subtracting around one percentage point from second-quarter GDP growth. Exports also fell to a five-month low due to reduced shipments of industrial supplies like petroleum, likely influenced by lower oil prices and an ongoing ceasefire between the U.S. and Iran. While consumer goods imports dropped 3.8%, capital goods imports surged year-on-year despite monthly declines. The Commerce Department will release its advance GDP estimate on Thursday. Despite trade headwinds, business investment in AI infrastructure is rising, supported by strong orders for non-defense capital goods. Consumer confidence dipped slightly to 90.8 from June’s level of 92.2 due to ongoing labor market concerns and the prolonged Middle East conflict.
Topics: GDP growth impact imports and exports U.S. trade deficit