Tags: gdp | trade | gap | economic | growth

Wall Street Raises GDP Forecast After Trade Gap Narrows

Wall Street Raises GDP Forecast After Trade Gap Narrows
(Mateusz Zogala/Dreamstime)

Wednesday, 17 April 2019 02:49 PM

Economists are more upbeat about first-quarter U.S. gross domestic product after Wednesday’s report showing the trade deficit unexpectedly narrowed in February, reducing the chances that growth slowed from the prior period.

JPMorgan Chase & Co. economists raised their GDP forecast following the report to about a 2.5 percent annualized growth pace in the first quarter from 2 percent.

Goldman Sachs Group Inc. forecasters boosted their tracking estimate to 2.1 percent from 1.7 percent and said they now expect a positive contribution from net trade to GDP growth, while the Federal Reserve Bank of Atlanta’s GDPNow model estimate increased to 2.4 percent.

The Commerce Department will release first-quarter GDP figures on April 26. Growth was 2.2 percent in the final three months of 2018.

The U.S. trade deficit in goods and services unexpectedly narrowed to an eight-month low in February, declining to $49.4 billion from $51.1 billion on a 1.1 percent rise in exports and a 0.2 percent increase in imports. That suggests net exports will make a positive contribution to gross domestic product in early 2019 after causing a drag for the prior two quarters.

“This better-than-expected trade situation creates a really good platform for first quarter GDP growth,” ING Groep NV Chief International Economist James Knightley wrote in a report. “Today’s trade figures mean 2.5 percent is looking achievable.”

Jim O’Sullivan of High Frequency Economics and Michael Pearce of Capital Economics saw the trade report as potentially pushing first-quarter GDP up as much as 1 percentage point.

The brighter outlooks follow an April 5-10 Bloomberg News survey showing the median estimate for first-quarter expansion increased to 1.6 percent from 1.5 percent seen last month.

The projections reflect forces such as slower imports and higher-than-expected inventory accumulation, which could weigh on growth later this year.

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Economists are more upbeat about first-quarter U.S. gross domestic product after Wednesday's report showing the trade deficit unexpectedly narrowed in February, reducing the chances that growth slowed from the prior period.
gdp, trade, gap, economic, growth
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2019-49-17
Wednesday, 17 April 2019 02:49 PM
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