Following record exports of $132 billion in May, economists raised their forecasts for economic growth in the second quarter.
Stronger foreign economies and a weakening dollar led to the revision, which follows an earlier survey of 69 economists taken July 2 to 9 that produced a median forecast of GDP growth of 3 percent for the second quarter, according to Bloomberg News.
The economy probably expanded at an annual rate of 3.6 percent last quarter, said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Mass., rather than the earlier estimate of 3.2 percent.
“Foreign trade is making an important contribution to growth,” Gault said in a note to clients. “Although the trade deficit rose this month, the increase was mostly due to higher oil prices.”
Economists at HSBC Securities USA Inc. and Morgan Stanley in New York were also among those raising their second-quarter estimate.
A stabilizing trade gap and improved spending on business equipment are helping cushion the impact of the housing slump and weaker growth in consumer spending, economists said.
Federal Reserve Bank of Philadelphia President Charles Plosser said yesterday, that while the housing slump will last “until sometime next year,” other factors that hurt the economy in the first quarter will likely prove temporary.
“Exports were unusually weak in the first quarter and are likely to rebound, and inventories have already shown signs of picking up,” Plosser said. “Data on new orders and shipments of manufactured goods have shown modest improvement in recent months, suggesting a bounce back in manufacturing and business investment in the second quarter.”
