NEW YORK (Reuters) - The U.S. economy is on track to expand by 1.1 percent in the second quarter after a larger-than-expected narrowing of its trade gap in April, Atlanta Federal Reserve’s GDPNow forecast model showed on Wednesday.
This is a stronger pace than the 0.8 percent reading on Monday.
The Commerce Department said on Wednesday the U.S. trade balance shrank to $40.88 billion in April, smaller than the $44.0 billion forecast among economists polled by Reuters.
This was lower than a revised $50.57 billion trade deficit in March.
The 19.2 percent drop in the April trade deficit was the largest decline since early 2009.
The Atlanta Fed said the April data suggested the trade gap poses a smaller 0.2 percentage point drag on gross domestic product in the second quarter versus an earlier estimate of a 0.6 point subtraction.
A huge trade deficit was a key factor that caused a 0.7 percent GDP contraction in the first quarter.
Reporting by Richard Leong; Editing by Chizu Nomiyama