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Atlanta Fed Lowers US Second-Quarter GDP View to 4.5 Percent

Atlanta Fed Lowers US Second-Quarter GDP View to 4.5 Percent
(Dollar Photo Club)

Wednesday, 06 June 2018 12:21 PM

The U.S. economy is expanding at a 4.5 percent annualized rate in the second quarter following data released this week on factory orders, vehicle sales and trade balance, the Atlanta Federal Reserve’s GDPNow forecast model showed on Wednesday.

The latest estimate on gross domestic product growth was weaker than the 4.8 percent pace estimated on June 1, the Atlanta Fed said.

Just before the Atlanta Fed's revision, the government said the U.S. trade deficit fell to a seven-month low in April as exports rose to a record high, lifted by an increase in shipments of industrial materials and soybeans.

Wednesday’s report from the Commerce Department was the latest sign of robust economic growth in the second quarter.

But a protectionist trade policy being pursued by President Donald Trump, which has seen the United States slapping tariffs on imports from a host of countries including China, Mexico and Canada, as well as those in the European Union, poses a threat to the otherwise rosy economic outlook, Reuters explained.

“One is hard-pressed as to not concur that the U.S. economy not only remains on solid footing, but is likely to show an accelerated pace of growth in the second quarter,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Still, “trade tensions remain a threat to the outlook and clearly have the potential to derail economic growth,” he said.

The Commerce Department said the trade gap narrowed 2.1 percent to $46.2 billion, the smallest since September. Data for March was revised to show the trade deficit falling to $47.2 billion, instead of the previously reported $49.0 billion.

Economists polled by Reuters had forecast the trade deficit unchanged at $49 billion in April. When adjusted for inflation, the trade gap narrowed to $77.5 billion from $78.2 billion in March. The so-called real trade deficit is below its $82.5 billion average in the first quarter.

If the trend in the real trade deficit is maintained, trade could contribute to gross domestic product in the second quarter after having a neutral impact in the January-March period.

Prices for U.S. Treasuries were trading lower. The dollar fell against a basket of currencies while stocks on Wall Street rose.

Trump in March announced tariffs on steel and aluminum imports to protect domestic industries from what he says is unfair competition from foreign producers. Last week he extended the duties to steel and aluminum imports from Canada, Mexico and the European Union.

Mexico has retaliated with measures targeting a wide range of U.S. farm and industrial products. Canada has said it would slap tariffs on imports from the United States, including whiskey, orange juice, steel, aluminum and other products.

Exports to Mexico, Canada and the European Union have recorded double-digit growth so far this year.

© 2019 Thomson/Reuters. All rights reserved.

   
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Atlanta Fed Lowers US Second-Quarter GDP View to 4.5 Percent
atlanta, fed, gdp, economy, view
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2018-21-06
Wednesday, 06 June 2018 12:21 PM
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