--- description: Economists are more upbeat about U.S. gross domestic product as the trade deficit narrowed, reducing the chances that growth slowed. title: Why the Shrinking Trade Deficit Signals Good Things About the U.S. Economy image: https://static.time.com/v3/assets/bltea6093859af6183b/bltde093bcdab65f2d0/6988d9b9bc6cfc69913e2a3c/time-logo.jpg?branch=production --- * [U.S.](/section/us/) ## U.S. Update your preferences in [Account Settings](/account/preferences/) Close * [Economy](/tag/economy/) ## Economy Update your preferences in [Account Settings](/account/preferences/) Close # Why the Shrinking Trade Deficit Signals Good Things About the U.S. Economy by [Reade Pickert / Bloomberg](/author/bloomberg/) ## Reade Pickert / Bloomberg Update your preferences in [Account Settings](/account/preferences/) Close Apr 17, 2019 4:04 PM CUT by [Reade Pickert / Bloomberg](/author/bloomberg/) ## Reade Pickert / Bloomberg Update your preferences in [Account Settings](/account/preferences/) Close Apr 17, 2019 4:04 PM CUT 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. ### What Bloomberg’s Economists Say “A narrower trade deficit in the first quarter will help lessen the sting of what is likely to be a weak quarterly GDP result… Analysts should treat the narrowing as a transitory development.”– Carl Riccadonna and Yelena Shulyatyeva, economists Click here for the full note. “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. ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/5572444/trade-deficit-united-states-economy/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/5572444/trade-deficit-united-states-economy/"},"headline":"Why the Shrinking Trade Deficit Signals Good Things About the U.S. Economy","datePublished":"2019-04-17T16:04:47.000Z","dateModified":"2026-02-23T23:19:21.723Z","description":"Growth was 2.2 percent in the final three months of 2018","url":"https://time.com/5572444/trade-deficit-united-states-economy/","keywords":["Economy","Bloomberg","onetime"],"thumbnailUrl":"","author":[{"@type":"Person","name":"Reade Pickert / Bloomberg"}],"articleSection":"U.S.","image":[],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"/section/us/","name":"U.S."}},{"@type":"ListItem","position":2,"item":{"@id":"/tag/economy/","name":"Economy"}},{"@type":"ListItem","position":3,"item":{"@id":"https://time.com/5572444/trade-deficit-united-states-economy/","name":"Why the Shrinking Trade Deficit Signals Good Things About the U.S. Economy"}}]}] ```