Wreckovery Summer II appears to be coming right on schedule.  The Commerce Department announced this morning that the trade deficit hit its highest level in almost three years, $50.2 billion, up from $43.6 billion in April.  Exports fell 0.5% while imports ramped up a whopping 2.6%, which will deliver a big hit to Q2’s GDP number:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total May exports of $174.9 billion and imports of  $225.1 billion resulted in a goods and services deficit of $50.2 billion, up from $43.6 billion in April, revised.  May exports were $1.0 billion  less than  April exports of $175.8 billion.  May imports were $5.6 billion more than April imports of $219.4 billion.

The year-on-year numbers were worse:

The goods and services deficit increased $8.1 billion from May 2010 to  May 2011.  Exports were up $22.8 billion, or  15.0 percent, and imports were up $30.8 billion, or  15.9 percent.

Recall that the Fed’s second round of quantitative easing (QE2) weakened the dollar in part to boost exports.  One might argue that without QE2 the trade deficit might have been worse, but it certainly didn’t make it any better.  Also, don’t forget that the tsunami in Japan and higher oil prices were supposed to limit imports in the short run, which either didn’t happen or covered up an even worse performance.

Reuters got caught by surprise, to no one’s surprise:

The U.S. trade gap widened much more than expected in May as a jump in oil prices helped push imports to the second highest level on record and exports fell slightly from April’s record high, a U.S. government report showed on Tuesday.

The trade deficit totaled $50.2 billion, the highest since October 2008, and well above the consensus estimate of $44.0 billion fromWall Street analysts surveyed before the report. …

The politically sensitive trade gap with China jumped more than 15 percent to $25 billion. U.S. companies imported $32.8 billion of goods and services from the Asian powerhouse during May, but exported just $7.8 billion worth to that country.

In worrisome sign for U.S. exports to China in June, recent data out of Beijing shows the country’s imports that month were the weakest in 20 months.

Reuters also reports that the report will “likely prompt analysts to scale back their estimates of second-quarter economic growth.”  I’d be happy if it causes Reuters’ economists to start paying attention to actual economic indicators when making those estimates.

Imports usually hit the bottom line of the GDP report hard.  If imports go up again in June as sharply as May, we may well drop into negative GDP growth territory in the Q2 economic report.