WASHINGTON — The U.S. trade deficit fell to the lowest level in more than nine years in May as exports posted a small gain while the weak American economy pushed imports down for a 10th straight month.

The slight rebound in exports, combined with a slower pace of decline in imports, showed that the nosedive in global activity may be starting to ebb. Delayed revivals overseas likely will hinder a rebound in the U.S., but most analysts still expect the American economy to grow a bit later this year.

The Commerce Department said yesterday the deficit narrowed to $26 billion, a drop of 9.8 percent from April and the lowest level since November 1999. Economists expected the deficit to widen to $30.2 billion in May.

GEITHNER DEFENDS STIMULUS DESPITE RISING JOBLESS RATE

WASHINGTON — Despite persistently high unemployment, Treasury Secretary Timothy Geithner said yesterday the Obama administration's economic stimulus plan is on the "expected path."

Geithner's remarks came amid waning public support for President Obama's economic policies. Republican critics say the rising unemployment rate is proof that the $787 billion stimulus has not helped reverse the effects of the recession.

About 2 million jobs have been lost since Congress passed Obama's stimulus package in February. Unemployment now stands at 9.5 percent, the highest in 26 years.

AIG, GOVERNMENT IN TALKS ABOUT BONUS PAYMENTS

NEW YORK — American International Group Inc. is consulting with the federal government about its plans to pay millions of dollars in retention incentives and bonuses, a person familiar with the situation said.

AIG is working with the Obama administration's compensation czar, Kenneth R. Feinberg, to ensure the government and the insurer are on the same page before it pays out remaining bonuses due to employees tied to 2008 contracts, according to the person, who requested anonymity because of the sensitive nature of the talks.

New York-based AIG faced intense public and Congressional criticism in March when it paid out hundreds of millions of dollars in retention bonuses to employees months after receiving a bailout from the government.