Trade figures suggest North America on the mend
by investor on 10/04/09 at 2:00 pm
The continued run of “less bad” economic data in the United States and Canada, such as Thursday’s drop in the U.S. trade deficit and return to a trade surplus in Canada, suggests the American economy may have performed better in the first quarter than many economists first thought.
“Things are still bad, but less bad than before, which is good in this environment,” said Sal Guatieri, a senior economist at BMO Capital Markets.
He said the narrowing in the U.S. trade deficit in February would likely cause forecasters to scale back their estimated declines for U.S. first quarter real gross domestic product before the advance reading is released by the Bureau of Economic Analysis on April 29. The market currently expects GDP to decline at an annualized pace of 5% in the quarter following a 6.3% plunge in the fourth quarter.
Charles Dumas, a director at Lombard Street Research said there was a good chance GDP would come in somewhere between 3%-4%. He said sharp job losses would suggest something to the contrary. However, Mr. Dumas said jobs do not precisely correlate with changes in GDP, and businesses appear to have pre-empted slow conditions by shedding jobs quickly. This has been evident in the “far from disastrous” fourth quarter corporate profit figures. As a result, expenditure, productivity, personal income and net exports, which have all performed relatively better in the recent data, would likely provide a more useful guide to economic activity.
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