Trade Deficit Widens, Analysts Scramble To Revise an Important Measure of the Economy

New data on the U.S.’ trade deficit prompted analysts at Deutsche Bank to revise their real gross domestic product estimates for the first quarter of 2014 to an annual rate of 2.0 percent, down from their original estimate of 3.1 percent.

The revision is in response to the Bureau of Economic Analysis announcing Thursday that U.S. exported $190.4 billion worth of goods in February and imported $232.7 billion in that same period, resulting in a goods and services deficit of $42.3 billion, up from January’s revised figure of $39.3 billion.

Analysts had hoped that the deficit would narrow to approximately $38.5 billion.

The trade deficit widened by a full 7.7 percent:

Image source: BEA
Image source: BEA

“We are revising down our estimate of Q1 real #GDP growth to +2.0% from +3.1% previously in light of the deterioration in net exports,” Joseph A. LaVorgna, Managing Director and Chief US Economist at Deutsche Bank Deutsche Bank, said in a tweet.

A wider trade gap could mean bad news for the U.S. economy as it signals that consumers are spending more abroad than they are in the U.S.

“February exports were $2.0 billion less than January exports of $192.5 billion,” the BEA reported. “February imports were $1.0 billion more than January imports of $231.7 billion”

“In February, the goods deficit increased $2.2 billion from January to $61.7 billion, and the services surplus decreased $0.8 billion from January to $19.4 billion,” the report adds.

Exports of services barely changed, coming in at around $58.7 billion. Meanwhile, imports of services increased by $0.8 billion to $39.3 billion.

“The goods and services deficit decreased $1.0 billion from February 2013 to February 2014. Exports were up $3.6 billion, or 1.9 percent, and imports were up $2.6 billion, or 1.1 percent,” the BEA reported.

Here are highlights from the Thursday report:

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