First-quarter GDP Was Likely Negative, Economists Say

The sharp widening of the trade deficit in March implies a steep downward revision to first quarter growth, pushing it into negative territory, according to several economists. The initial estimate by the government, of a slim 0.2% gain at an annual rate in the first quarter, "will look pretty good after the revision that will come out on May 29," said Jennifer Lee, economist at BMO Capital Markets, in a note to clients. Laura Rosner, an economist at BNP Paribas, said the downward revision may be offset somewhat by stronger inventory building, as the imported goods end up in warehouses. Estimates varied but economist forecasts for the first quarter ranged from zero to negative 0.4%.