February 8, 2019 / 4:38 PM / 7 months ago

N.Y. Fed reduces U.S. first-quarter GDP growth view to 2.2 percent

FILE PHOTO: The Federal Reserve Bank of New York building is seen in the Manhattan borough of New York, U.S., December 16, 2017. REUTERS/Eduardo Munoz/File Photo

NEW YORK (Reuters) - The U.S. economy is expanding at a 2.17 percent pace in the first quarter based on data on trade balance in November and services business activity in January, the New York Federal Reserve’s Nowcast model showed on Friday.

This was slower than the 2.39 percent rate calculated by the N.Y. Fed model a week ago.

Services sector activity decelerated to its slowest growth rate in six months in January on jitters about the impact from the historically long federal government shutdown that lasted 35 days, data from the Institute for Supply Management released on Tuesday showed.

A day later, the Commerce Department reported the U.S. trade gap narrowed for the first time in November, but the overall level of trade deficit has remained elevated despite the Trump administration’s “America First” policies which include slapping of tariffs on China and other major trade partners.

The N.Y. Fed also reduced its outlook on the gross domestic product in the final three months of 2018.

The N.Y. Fed forecast model showed fourth-quarter GDP likely grew at a 2.41 percent annualized rate, slower than the 2.61 percent pace it calculated a week earlier.

On Wednesday, the Commerce Department said it will release its first reading on fourth-quarter GDP on Feb. 28 following a delay due to the government shutdown.

Reporting by Richard Leong; Editing by Chizu Nomiyama

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