Economists revised their estimates of U.S. economic growth downward on Thursday after the government reported a jump in the trade deficit during December to its highest level in more than two years. Americans exported less and imported more, in part because the dollar’s strength made American goods and services less competitive in the global market.
Michael Feroli, chief U.S. economist at JPMorgan Chase, wrote in a client note that he’s now estimating that gross domestic product expanded at an annual pace of only 2 percent in the last three months of 2014. Feroli called that figure “a little dispiriting,” considering that the economy was being boosted at the time by lower oil prices. (The government’s first estimate of annualized GDP growth in the fourth quarter was 2.6 percent.)
“It is not hard to come up with reasons for the weakness in today’s report—sluggish foreign growth and a strong dollar are the obvious ones,” Feroli wrote.