Widening Trade Deficit Puts Pressure on 3Q GDP

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The worrisome global growth story manifested itself in the trade data that was reported today for September. After months of narrowing because of lower petroleum imports, the trade deficit surged to 7.6 percent. Imports were not the story, but rather it was exports or lack of them that are behind the widening deficit. Exports to key trading partners China, Japan and Europe fell 3.2, 14.7 and 6.5 percent respectively and the overall 1.5 percent decline was the sharpest decline since February. This latest report may result in downward pressure on the third quarter GDP second estimate. However, based on the strength of the latest manufacturing PMI, the U.S. economy is running at 3 percent plus going into the fourth quarter. Please follow global trade on page 21 of the Voya Global Perspectives book.

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