US Q1 2019 GDP rises 3.2% and exceeds expectations
The US gross domestic product remains strong as consumer spending rises.
The US gross domestic product (GDP) increased by 3.2%, according to the US Commerce Department. The statistic surpasses financial experts’ expectations of 2.3% growth for the US economy.
US Q1 2019 GDP: key figures
US Q1 2019 GDP shows strong consumer confidence
Personal consumption grew by 1.2%, more than the 1% predicted by economists. However, that figure is less than the statistic of 2.8% in Q4 2018 because of lighter sales of major purchases like trucks.
Mark Zandi, chief economist for Moody’s Analytics, said that the positive US GDP numbers about US consumers are a sign that the economy is still strong.
‘The American consumer is key to the U.S. economy. We consume everything we produce and a lot of what everyone else produces across the globe. So if the American consumer is hanging tough, that's good for our economy but also good for the global economy,’ said Zandi.
Will the US GDP continue to grow?
White House economic adviser, Larry Kudlow, predicts that the US GDP will continue to grow throughout the year.
‘I know I may be at loggerheads with some of the forecasters and maybe even the consensus. But I really think this is going to turn out to be a pretty strong first half and a pretty strong year,’ said Kudlow.
Though Kudlow and US President, Donald Trump, tout the corporate tax cuts passed in 2018 as a reason for economic growth, Zandi noted that the effects of the tax cuts were short-lived.
‘There's certainly no game-changing event here. The tax cuts don't seem to have jump-started a significant boost in investment — at least not one that's sustainable,’ said Zandi.
Paul Ashworth, chief US economist with Capital Economics, has a pessimistic view of the US Q1 2019 GDP numbers. He believes the economy will slow after a temporary boost with spending on infrastructure.
‘Taking out the oversized boosts from net trade, inventories and highways investment, which will all be reversed in the coming quarters, growth was only around 1%. Under those circumstances, we continue to expect that overall growth will slow this year, forcing the Fed to begin cutting interest rates before year-end,’ said Ashworth.
The growth of the US Q1 2019 GDP shows that consumer spending is still robust. However, there are still signs that Wall Street still has to closely monitor the US economy to see if the growth will last.
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