The U.S. economy is expanding at a 2.7 percent annualized rate in the fourth quarter based after data showed the U.S. trade deficit fell for the first time in six months, the Atlanta Federal Reserve’s GDPNow forecast model showed Wednesday.
This was faster than the 2,5 percent pace for fourth-quarter gross domestic product that the Atlanta Fed’s GDP program calculated on Friday.
The nowcast of the contribution of net exports to fourth-quarter real GDP growth increased from -0.52 percentage points to -0.23 percentage points after Wednesday morning’s international trade report from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis.
The next GDPNow update is Thursday, February 14, barring any further updates by the U.S. Census Bureau or the U.S. Bureau of Economic Analysis to their economic release schedules.
The U.S. trade deficit fell for the first time in six months in November amid declines in imports of cellphones and petroleum products, leading economists to boost their economic growth estimates for the fourth quarter.
The consumer goods-led drop in imports reported by the Commerce Department on Wednesday would normally raise concerns about slowing domestic demand.
But the sharp drop followed five straight monthly increases, which economists said reflected businesses stockpiling imported goods as the trade war between the United States and China escalated, Reuters explained.
“The sharp slowdown may reflect increasing caution given the unpredictable outcome of the administration’s current trade talks,” said Chris Rupkey, chief economist at MUFG in New York. “The good news is this will temporarily boost real GDP in the fourth quarter.”
The trade deficit dropped 11.5 percent to $49.3 billion in November. It had increased for five straight months. Economists polled by Reuters had forecast the trade deficit would fall to $54.0 billion in November.
The release of the report was delayed by a recently ended five-week partial shutdown of the federal government.
The politically sensitive goods trade deficit with China fell to $37.9 in November from $43.1 billion in October.
The overall trade deficit has remained elevated despite the Trump administration’s “America First” policies, which have led Washington to impose tariffs on a range of imported goods from China, sparking a trade war with Beijing.
President Donald Trump has long railed against China’s trade surplus with the United States, and accuses Beijing of not playing fairly on trade. The United States has also slapped duties on imported steel, aluminum, solar panels and washing machines.
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