The goods trade deficit widened sharply last month. It was probably all about artificial intelligence.

The Commerce Department on Thursday reported that U.S. imports of goods outstripped exports by a seasonally adjusted $118.8 billion in July, compared with a deficit of $101.4 billion in June. Most economists thought the deficit would narrow instead.

The culprit was a surge in imports of capital goods-a category that includes items such as industrial machinery, medical equipment and, notably, semiconductors and computers. Excluding automotive goods, the U.S. imported $140.1 billion in capital equipment last month, up 11% from June's $125.9 billion. That marks the largest percentage increase in over 30 years, according to data from Haver Analytics.

It is a reflection of how much of America's AI buildout relies on imported tech goods. That has consequences for the economy-because those products aren't produced in the U.S., they are factored out of gross domestic product. Economists were busy revising down their third-quarter GDP estimates after the trade data came out. Barclays economists, for example, now see it tracking at a 1.8% annual rate, versus the 2.2% they had previously penciled in.