GDP Will Probably Be Revised Downward After Trade Balance Figures

The US deficit widened in December and by more than expected. The deterioration was largely a function of oil imports. Simply put, the US imported more oil products and at higher prices. The non-energy deficit was largely steady at $16.7 bln from $16.5 in November.

One important implication of the wider real trade deficit is that the 0.5% the net exports contributed to US Q4 GDP will likely be revised down. On top of that, the wholesale inventory figure out earlier this week also points to a modest downward revision to Q4 GDP's preliminary 5.7% annual growth pace.