June 7, 2023

WASHINGTON, June 7 (Reuters) - The U.S. trade deficit widened by the most in eight years in April as imports of goods rebounded while exports of energy products declined, a trend that if sustained, could result in trade being a drag on economic growth in the second quarter.

The increase reported by the Commerce Department on Wednesday was the biggest since April 2015 and pushed the trade gap to the highest level in six months. It led economists to expect that trade could chop off as much as 2.5 percentage points from gross domestic product this quarter, unless imports reversed course, a tall order given the persistent strength in domestic demand. A strong dollar and slowing global demand could curb exports.

"The terms of trade are worsening and this will bring down second-quarter estimates of real GDP growth closer to the 1% stall speed where bad things can happen and the economy can stumble and go over the cliff," said Christopher Rupkey, chief economist at FWDBONDS in New York.

Read more: