US: Net exports exert significant drag on Q1 GDP growth – Wells Fargo

By FXStreet Analysts from Wells Fargo, explained that February data shows that trade weighed on GDP growth during the first quarter.

Key Quotes:

“The U.S. deficit in international trade in goods and services widened from $45.9 billion in January to $47.1 billion in February. Although exports of goods and services rose by $1.8 billion in February, which was the first increase in five months, imports were up $3.0 billion during the month.”

“The nosedive in oil prices at the beginning of the year pulled down the value of petroleum imports by $1.3 billion. At only $9.9 billion in February, the value of the country’s imported oil bill is at a 13-year low. Despite this drop in petroleum imports, the total value of imports rose by $3.0 billion in February.”

“Although real exports rose 2.2 percent in February, which almost entirely reversed the decline in January, weak momentum in export growth coming into 2016 means that net exports likely exerted a significant drag on GDP growth in the first quarter. Indeed, barring a significant turnaround in March, we estimate that real exports of goods and services fell at an annualized rate of roughly 3 percent in Q1 whereas real imports grew more than 2 …read more

Source:: FX Street