By Cornelius Luca
New York, May 18 (BridgeNews) - The 16.1% widening of the U.S. goods and services trade deficit in March to $31.2 billion from the downward revised February gap of $26.9 billion is likely to drag down first-quarter gross domestic product by as much as 0.2 percentage point, economists estimated.
However, along with the negative impact from inventories and consumption, the final GDP readings are expected to be lowered by about 0.5 percentage point to around 1.5%.
* * * "The widening of the trade gap exceeded the expectations of the Commerce Department. I expect the trade (numbers) alone to drag down Q1 GDP by about two tenths of one percent. Given the decline in other areas, such as inventories, I think that the Q1 GDP will be revised down to around 1.5%, a lot closer to what most economists had estimated in the first place," said Josh Feinman, chief economist at Deutsche Asset Management Americas.
Going into the trade report, economists expected the trade data to have a neutral to a minimal impact on first-quarter GDP.