Unsteady as she goes

26 April 2019 By Tom Buerkle

The faster-than-expected first-quarter growth rate isn’t everything it seems. Trade swings and an inventory bulge drove much of the increase while consumer spending and business investment slowed. The news caused interest rates to drop, which should keep recession risks at bay.

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The United States’ gross domestic product expanded at a 3.2 percent annual rate in the first quarter, the Commerce Department’s Bureau of Economic Analysis said on April 26 in its advance estimate for the period. Economists polled by Reuters had anticipated a growth rate of 2 percent. The economy grew at a 2.2 percent rate in the preceding quarter, and by 2.9 percent during all of 2018.

The acceleration in growth reflected upturns in state and local government spending, private inventory investment, and exports, and a slower decline in residential investment. Those factors were partly offset by decelerations in personal consumption expenditures and nonresidential fixed investment, while federal government spending declined.

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