Will Strong Trade Data Translate Into GDP Growth?

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The advance estimate for fourth-quarter GDP that showed an unexpected 0.1 percent contraction bummed everybody out. Consensus estimates were looking for modest growth around 1.0 percent, but a 22.2 percent year-end decrease in defense spending rained on the entire parade.

But, being based on preliminary and incomplete data, advance estimates are fallible. This is why the Bureau of Labor Statistics releases two more reports (due out at the end of February and the end of March), revising its estimates as it crunches more numbers. These changes can often be substantial. The final estimate for third-quarter GDP growth was 3.1 percent, a full 1.1 points higher than the 2.0 percent estimated in the advance report. But the revisions aren’t always positive. For the second quarter, the advance estimate was for 1.5 percent growth, which was finalized at 1.3 percent growth.

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However, following a strong international trade report released on Friday, there’s a good chance that the advanced estimate for the fourth quarter could be revised upwards into positive territory…

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