The U.S. trade deficit widened in March, according to analysis released earlier this week by the Joint Economic Committee based on data from the Bureau of Economic Analysis, U.S Census Bureau, Treasury Department, and Bureau of Labor Statistics.
The total trade deficit reached $60.3 billion in March, an increase of $2.53 billion from February and 3% above the 12-month average. The goods trade deficit stood at $88.71 billion up $4.09 billion from the prior month and also 3% above its 12-month average. This was partially offset by a services trade surplus of $28.41 billion, which rose $1.56 billion from February and was likewise 3% above average.
For the full 12 months through March 2026, the United States recorded a total trade deficit of $700.49 billion. This reflected a goods trade deficit of $1.03 trillion, partially offset by a services trade surplus of $331.39 billion. Total exports over the period reached $3.53 trillion, while total imports totaled $4.23 trillion.
Largest Trade Imbalances by Country
Over the trailing 12 months, the largest goods trade deficits were with Mexico ($194.42 billion, 18.96% of the total goods deficit), Vietnam ($193.35 billion, 18.86%), and Taiwan ($177.28 billion, 17.29%). Additional notable deficits occurred with China, Thailand, Ireland, Germany, Japan, South Korea, and India.
The largest goods trade surpluses were recorded with the Netherlands ($68.49 billion), United Kingdom ($47.42 billion), and Hong Kong ($40.32 billion).
Top Exports and Imports
The leading exported goods by value were civilian aircraft, engines, equipment, and parts; pharmaceutical preparations; and nonmonetary gold. Together these categories accounted for 17.54% of all U.S. goods exports over the 12-month period.
The United States exported the most to Mexico ($347.18 billion), Canada ($327.56 billion), and the United Kingdom ($109.51). These three destinations represented 34.72% of total U.S. exports.
On the import side, the top categories by value were computers; pharmaceutical preparations; and passenger cars, which together made up 19.74% of all imported goods. The largest sources of imports were Mexico ($541.61 billion), Canada ($365.62 billion), and China ($266.59 billion), accounting for 35.74% of total U.S. imports.
Import Duties Decline
In March, the U.S. collected $20.49 billion in import duties—18.40% below the 12-month average—with the average applied duty rate at 6.85%, down 2.45 percentage points from the yearly average. Over the full 12 months, calculated duties totaled $301.30 billion.
The highest duty revenues came from passenger cars, vehicle parts, and electric apparatus, with notably higher average rates applied to certain categories such as iron and steel products. China remained the top source of duty revenue.
Currency Movements and Terms of Trade
From March 2025 to March 2026, the U.S. dollar weakened against several major currencies: by 4.9% against the Chinese yuan, 6.3% against the euro, 2.2% against the British pound, and 11.9% against the Mexican peso. It strengthened 6.1% against the Japanese yen.
A stronger dollar typically improves U.S. terms of trade by reducing the cost of imports, allowing the country to purchase more foreign goods for the same volume of exports.
Export and Import Price Trends
Year-over-year export prices rose 5.57 percent overall, while import prices increased 5.10%. Non-fuel import prices rose 5.85%, with notable variations across categories including industrial supplies and consumer goods.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Arizona Senate Republicans announced on Monday that they passed a $17.9 billion budget for fiscal year 2027 that includes $1.45 billion in tax relief over four years and spends approximately $800 million less than Governor Katie Hobbs’ proposal.
The budget, approved by the Legislature and sent to Hobbs, is based on updated April revenue projections that showed a $200 million decrease in available resources.
According to Senate Republicans, the plan includes a series of tax changes intended to provide cost-of-living relief, including eliminating state taxes on tips and overtime pay, increasing the standard deduction, allowing full deductions for child-care expenses, increasing the dependent tax credit by $25, and creating a $6,000 deduction for seniors age 60 and older with retirement or pension income.
🚨FOR IMMEDIATE RELEASE: Senate Republicans Pass Historic $1.45 Billion Tax Relief Budget- Delivering Permanent Affordability for Families, Workers and Seniors While Protecting Core Services
The proposal also includes conformity with federal tax policy changes associated with Donald Trump’s tax cuts, which the Senate said would ensure Arizona taxpayers do not need to refile their 2025 state tax returns.
“This is a serious, disciplined budget that puts Arizona families first,” Senate President Warren Petersen (R-LD14) said in a statement. “We cut taxes, protect essential services, and base every decision on real April revenue projections — not wishful thinking.”
He added, “In divided government, we faced the math, eliminated waste through targeted reforms, and delivered real results without raising taxes or growing government.”
The budget maintains current funding levels for K-12 education and public safety, preserves the voter-protected K-12 State Land Trust, and limits overall spending growth to 1.9 percent.
To address the projected shortfall, Senate Republicans said the plan includes policy changes aimed at reducing spending, including enhanced eligibility verification in public assistance programs such as the Arizona Health Care Cost Containment System (AHCCCS) and the Supplemental Nutrition Assistance Program (SNAP), a 5% reduction in agency operating budgets excluding public safety and child welfare agencies, and the repeal of certain tax credits and subsidies, including solar incentives.
The budget does not reduce base pay for Arizona Department of Public Safety troopers or firefighters and does not modify existing data center incentives previously signed into law.
The plan also includes $4.75 million in emergency funding for the Department of Public Safety, which Senate Republicans said the agency had requested and that the governor had previously vetoed as a standalone bill.
The Arizona Senate Republican Caucus said the budget reflects the constraints of divided government and relies on no new taxes or fees.
“This budget reflects the reality of divided government,” Petersen said. “While Democrats were on the floor today saying we need to raise taxes, we are instead delivering historic tax relief without burdening taxpayers. Your business and your wallet are on the ballot this fall. Vote wisely.”
The proposal now awaits Hobbs’ action.
House Speaker Steve Montenegro (R-LD29), Petersen, and other legislative Republican leaders are scheduled to hold a press conference on Tuesday at 1 p.m., according to a media advisory, to highlight the budget and urge Hobbs to sign the legislation.
Arizona’s affordable housing shortage is primarily the result of years of underbuilding after the Great Recession, not the rise of short-term rental (STR) platforms like Airbnb, according to a new report from the Common Sense Institute.
The report, titled “Home Prices, the Great Recession, and the Sharing Economy: Evidence from Arizona and Airbnb,” found that Arizona homebuilders sharply reduced construction following the 2008 housing crash and never returned to pre-recession levels, even as population growth resumed. Permit activity in Arizona fell from nearly 90,000 annual authorizations in 2005 to just 12,600 in 2010. By 2019, the state was still authorizing only about 45,000 new housing units per year, roughly half its pre-recession pace.
According to CSI, Arizona built roughly 38,000 fewer housing units per year between 2008 and 2023 than would have been needed to keep pace with long-term historical trends. Researchers concluded that this persistent gap in construction created a housing deficit that continues to drive up prices across the state.
Before the housing crash, Arizona was building at a rapid pace:
• ~400,000 homes built from 2003–2007 After the Great Recession, construction slowed significantly: • ~211,000 homes built from 2010–2019
— Common Sense Institute Arizona (@CSInstituteAZ) April 16, 2026
While Airbnb and similar platforms have drawn criticism for reducing housing supply, the report found that short-term rentals account for only a small share of Arizona’s housing stock and are concentrated in tourism-heavy markets rather than spread evenly across the state. According to the Arizona Association of Realtors, CSI found “no observable statistical relationship” between the growth of short-term rentals and rising home prices across most Arizona communities.
Then the pandemic hit an already tight housing market. Demand surged as more people looked to move or buy, but supply had not caught up.
• Home prices increased by over 64% from 2019 to 2022
— Common Sense Institute Arizona (@CSInstituteAZ) April 16, 2026
The institute stated that under a new analysis examining “the underlying causes of Arizona’s housing shortage and the role of the short-term rental market,” it found “no consistent statistical relationship between short-term rental growth and home price appreciation across Arizona communities.”
CSI further observed that short-term rentals represent less than 2% of Arizona’s 3.3 million housing units and that, statewide over ten years, “there is no — and sometimes even a negative — relationship between home price increases and the concentration of STRs.”
The report notes that Arizona’s housing market never fully recovered from the collapse of the mid-2000s housing boom. Phoenix-area home values fell by more than 50 percent during the recession, foreclosures surged, and builders dramatically slowed new construction. Although Arizona’s economy and population later rebounded, homebuilding lagged far behind demand.
CSI estimated that as of the second quarter of 2025, Arizona faced an immediate housing shortage of roughly 52,800 units statewide. Using a broader, long-term measure, the organization estimated that the state’s housing supply was short by more than 121,000 units at the time. Maricopa County alone is projected to have a deficit of more than 34,700 homes.
Housing affordability remains a major issue for Arizona families. CSI estimates the average home in Arizona now costs more than $426,000, approximately $53,000 more than it would have if home prices had continued along their pre-pandemic trend. The organization estimates Arizona households now need an annual income of about $95,800 to afford the average home under conventional mortgage guidelines, or roughly 92% of the state’s average household income.
The analysis also finds no consistent statistical relationship between short-term rental growth and home price increases across communities.
The bigger driver is a long-term supply shortage — years in the making, before STRs became a major part of the conversation.
— Common Sense Institute Arizona (@CSInstituteAZ) April 16, 2026
“Arizona’s housing challenge is fundamentally a supply issue,” Glenn Farley, Director of Policy and Research at Common Sense Institute, said in a statement. “Homebuilding slowed dramatically after the Great Recession and has struggled to catch back up, even as Arizona continued adding people and jobs. The data consistently show that when housing production falls behind demand, whether because of permitting constraints, construction slowdowns, or long-term underbuilding, prices rise. Expanding housing supply will be essential to improving affordability across the state.”
The Joint Economic Committee released its Monthly Expenditures Update for March 2026 alongside the advance estimate for first-quarter 2026 Gross Domestic Product (GDP), painting a picture of an economy experiencing above-target inflation alongside continued, albeit moderating, real consumption growth and accelerating nominal activity.
From February to March 2026, headline Personal Consumption Expenditures (PCE) price index inflation accelerated to 0.66%, up from 0.38% the prior month.
Core PCE inflation, which excludes volatile food and energy prices, rose 0.29% compared to 0.37% (durable goods +0.42%; nondurable goods +1.98%), while services inflation stood at 0.32%. Gasoline and other energy goods posted a sharp 19.23% month-over-month rise.
Real personal consumption expenditures (PCE) advanced 0.24% ($39.57 billion), in the period. Real spending on goods rose 0.55% ($31.34 billion), led by durable goods (+0.94% or $20.12 billion), while services spending increased a more modest 0.10% ($10.63 billion). The nominal personal savings rate declined 0.3 percentage points to 3.6%.
On the income side, headline personal income grew 0.56% ($149.22 billion). However, real disposable personal income per capita edged down 0.07%, indicating that after-tax income growth lagged behind price increases.
Year-over-year measures showed headline PCE inflation at 3.50% in March 2026 compared to March 2025—well above the Federal Reserve’s 2% target—while core PCE inflation registered 3.20%. Both figures accelerated from the prior year’s pace.
GDP Advance Estimate
In its Q1 2026 GDP Advance Estimate the Committee reported that real GDP increased at a 1.99% annualized rate from the fourth quarter of 2025. Current-dollar GDP rose 5.64% annualized, or $433.731 billion, reaching $31.856 trillion. The GDP deflator contributed approximately 3.6 percentage points to nominal growth.
Consumer spending contributed 1.1 percentage points to real GDP growth, while nonresidential fixed investment provided a strong 1.4 percentage point boost. Government spending added 0.7 points, and private inventories contributed 0.4 points. Net exports subtracted 1.3 points, and residential investment was a slight drag at -0.3 points.
Category highlights (Nominal PCE Levels, March 2026)
Housing and utilities: $3,904.5 billion (17.86% of total)
Health care: $3,741.3 billion (17.11%)
Financial services and insurance: $1,822.6 billion (8.34%)
Food and beverages: $1,547.8 billion (7.08%)
Food services and accommodations: $1,526.4 billion (6.98%)
Notable year-over-year nominal increases included financial services and insurance (+10.46%), health care (+8.02%), and transportation services (+9.53%). Gasoline and other energy goods rose sharply both month-over-month (+19.23%) and year-over-year (20.97%).
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Arizona House Republicans announced passage of a state budget proposal this week, saying it delivers significant tax relief while reducing overall spending compared to Governor Katie Hobbs’ plan.
In a press release, House GOP leaders said the budget includes what they described as one of the largest tax cuts in Arizona history while maintaining funding for core government services.
The proposal has advanced through a series of budget-related bills in the House and Senate, including House Bill 4140, which implements key components of the fiscal year 2026–2027 budget.
According to the release, the proposal is designed to provide cost-of-living relief for families, seniors, workers, and small businesses and would spend approximately $800 million less than Hobbs’ budget.
Republican lawmakers said the plan maintains a balanced budget while prioritizing affordability, drawing a contrast with Hobbs’s budget plan.
“Arizona Republicans are delivering one of the largest tax cuts in state history, and our proposal has the votes to pass both chambers,” Arizona Senate President Warren Petersen (R-LD14) said in a statement.
“For months, Governor Hobbs told us full conformity to federal tax relief, including tax cuts for tipped workers, hourly employees, seniors, and small business owners, was impossible. It’s not,” he continued. “Under President Trump, Washington delivered relief for working Americans, and Arizona Republicans are making sure our taxpayers receive those same Trump tax cuts here at home. Republicans balanced the budget with honest numbers, protected core priorities, and provided real relief for families still struggling with higher costs. Arizona is leading the nation as the only state we are aware of advancing the full Trump tax cuts into law. Despite the Governor’s stunts, Republicans stayed at work and got the job done for our citizens.”
The budget proposal comes amid an ongoing policy dispute between the Republican-controlled legislature and the governor over taxes and spending priorities. Earlier in the session, Republican leaders advanced tax proposals they described as among the largest in state history, while Hobbs outlined a separate approach focused on targeted relief and new revenue mechanisms.
Arizona House Speaker Steve Montenegro (R-LD29) said in a statement, “House and Senate Republicans put forward a serious budget built on facts, not wishful thinking.”
He added, “It delivers major tax relief, eases cost pressures on Arizona families, fully funds core state services, and spends far less than the Governor’s proposal. It does not rely on gimmicks, inflated projections, or money that may never show up to balance the budget. In divided government, responsible leadership means facing the math, making hard choices, and protecting taxpayers. Republicans have done that, putting a workable budget on the table and giving Arizona a clear path to finish the session responsibly. The proposal is ready to move, and so is the Legislature. It is time to pass the bills and deliver for Arizona.”
In a post on X, Montenegro and Petersen said the proposal delivers tax relief, reduces spending, and fully funds core state services.
Arizona Republicans are delivering a serious, balanced budget for our state that spends about $800 million less than Governor Hobbs’ plan.
This plan cuts taxes, lowers costs for families, and fully funds the core services Arizonans rely on, all while staying within a responsible… pic.twitter.com/cRxSfV4nJ6
— Arizona House Republicans (@AZHouseGOP) April 27, 2026
Additional details on specific tax provisions and final budget allocations are expected to be addressed as the proposal moves through the legislative process and negotiations continue with the governor’s office.
On Monday, House Republicans put forth what they called a balanced budget of $17.9 billion.
By Tuesday, Gov. Katie Hobbs said the proposal was all but dead.
The leaders of both chambers characterized their budget as uniquely reflective of total conformity with federal tax law — no other states adopted the entire slate of tax cuts — which Hobbs doubted could be accomplished. They estimated tax relief would amount to $1.5 billion over the next three years, and Republicans claim working families would feel the most benefit from the cuts.
“Politics are easy; governing is harder. We chose governing,” said Sen. President Warren Petersen (R-LD14). “We’re moving a budget that cuts taxes, funds core services, shrinks government, includes priorities both sides have raised, and gives Arizona a full path to finish the session.”
As budget talks have failed to progress in a meaningful way, the legislature stagnates under the weight of a bill moratorium.
In a statement issued Tuesday, Hobbs did acknowledge Republicans for working with her to adopt certain components of her preferred budget like middle class tax cuts and reductions to childcare cost. However, she disputed Republican leaders on their claims of fiscal responsibility.
She accused Republicans of siding with “billionaires, data centers, and special interests” as well as “kicking Arizonans off their healthcare and taking food off their tables.” The governor said she won’t engage in negotiations further unless they adopt her preferred budget.
Contentious aspects of the Republican-proposed budget included cuts to state agency budgets, and SNAP and Medicaid program funding.
“Until they also engage in good-faith negotiations rather than attempting to force through a partisan budget, I will be closely monitoring the situation in the coming days to determine whether the legislative majority is willing to negotiate in good-faith bipartisan negotiations and have the bill moratorium lifted,” said Hobbs.
NEW: @GovernorHobbs reacts to the newly released Republican budget: “Just like in Washington, they’re paying for tax breaks for billionaires, data centers and special interests by kicking Arizonans off their healthcare and taking food off their tables.” pic.twitter.com/8UlFIqa5S1
Hobbs also discussed the budget talks during a press conference for a separate topic on Tuesday, Reentry 2030. Hobbs tentatively praised Republicans for some concessions on their part, but generally was critical of them for balking at her $18.7 billion spending plan. A key part of that plan Hobbs hopes to win through in budget talks concerns draining the public land trust to boost K-12 education funding.
“I’m glad to see the Republicans have shown their budget proposal, there’s some things I’m encouraged about in their proposal, but across-the-board agency cuts is not one of them,” said Hobbs. “I’m hopeful that we can get back to the table and start having real conversations about a budget that works for Arizona.”
Legislative leaders have said Hobbs’ proposal is a nonstarter because the Public Land Trust was intended for long-term funding. Hobbs’ plan intends to renew funding through the yet-approved Proposition 123. Senate President Petersen said Hobbs’ plan wasn’t feasible and would push the state $1.5 million further into debt.
“We’re spending about $800 million less than what the governor has proposed, and the governor has proposed to raise taxes,” said House Speaker Montenegro (R-LD29) in an interview with Fox News.
“[H]er math doesn’t work,” said Petersen.
Hobbs has vetoed tax conformity efforts and walked away from budget negotiations multiple times since the start of the year.
The legislature began hearing budget bills on Tuesday during a joint hearing of the Senate and House Appropriations Committees.
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