US: Trade contributes positively to Q1 GDP growth - Wells Fargo

Analysts from Wells Fargo, took a look a today’s US March trade balance report. They point out that the deficit stayed almost unchanged from the upwardly revised $43.8 billion deficit recorded in February. “A slightly larger goods deficit was matched by a similar increase in the services surplus.”

Key Quotes: 

“The U.S. trade deficit was $43.7 billion in March, lower than what markets were expecting and just $0.1 billion lower than the slightly upwardly revised $43.8 billion deficit recorded in February. Exports of goods and services declined 0.9 percent on the month, to $191.0 billion, or $1.7 billion lower than February, while imports of goods and services declined
0.7 percent, also by $1.7 billion, to $234.7 billion.”

“Today’s release of the March trade deficit in goods and services has confirmed our estimate that the trade sector contributed slightly to GDP growth in Q1. That is, if there is a downward revision to first quarter GDP growth, the odds are that other sectors would cause that revision rather than the external sector.”

“However, we believe that the positive contribution from the external sector to economic growth is temporary. Despite our forecast that has the trade sector subtracting from economic growth to the tune of about 0.3 percent to 0.4 percent per quarter, we still expect the U.S. economy to gain strength during the rest of the year.”