U.S. trade deficit swells to record $48.3 billion

By Carlos Torres and Courtney Schlisserman
Bloomberg News Service

A woman looks over televisions on display in a Best Buy store in New York. Retail sales increased in May and demand grew for cars, electronic goods and other products made outside the United States. Associated Press

The gap in goods and services trade was more than any economist had estimated in a Bloomberg News survey and followed a March deficit of $46.6 billion, the Commerce Department data showed yesterday. Exports were the second-highest on record. Retail sales increased 1.2 percent last month after a 0.6 percent decline.

The higher demand reflected in the trade and retail reports adds to evidence of a healthy U.S. economy. The creation of 1.2 million jobs so far this year is boosting incomes and lifting demand for cars, electronic goods and other products made outside the U.S.

"The consumer is hanging in there, business spending is picking up, and employment growth is strong," said Cary Leahey, senior economist at Deutsche Bank Securities in New York.

The economy is forecast to expand at a 4.5 percent annual rate in the second quarter, according to the median of 52 economists surveyed by Bloom-berg News from May 27 to June 7. In the first three months, it grew at a 4.4 percent pace.

Imports rose 0.2 percent for the month to $142.3 billion. Exports fell 1.5 percent to $93.9 billion.

Rising consumer incomes boosted sales at retailers such as J.C. Penney Co., Neiman Marcus Group Inc. and Wal-Mart Stores Inc. Retail sales increased in May as purchases rebounded at auto dealers and record gasoline prices bolstered service station receipts. Excluding autos, sales rose 0.7 percent after a 0.1 percent decrease a month earlier.