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US Q1 2019 GDP growth stays steady at 3.1% in final report

The third report on US Q1 GDP shows mixed results of high government spending and lowered consumer spending.

US Q1 2019 GDP (gross domestic product) growth was unrevised at 3.1% in its third and final report from the US Commerce Department. The statistic is in line with the previous Q1 GDP report, but still below economists’ expected 3.2% rise.

US Q1 GDP: key figures

Personal consumption +0.9%
Business structure investment +4.3%
Imports -1.9%
Exports +5.4%

Trade and government spending up, consumer spending down

Trade increased with US exports upwardly revised from 4.8% to 5.4%. Imports decreased in the final report by 1.9%, less than the previously reported 2.5%. Trade likely increased from January-March before the US-China tariff war escalated in May. Investment in business structures like office buildings also grew by 4.3%. The US Q1 GDP was also helped by an increase in government spending on infrastructure.

While trade and government spending grew, consumer spending decreased. In the final Q1 GDP report, personal consumption growth was revised down to 0.9% from 1.3%.

What do economists say about US Q1 GDP?

Ian Shepherdson, chief US economist at Pantheon Macroeconomics, noted that the business capital expenditure increase is a good sign for the economy and should be reassuring to the US Federal Reserve.

‘Overall these are encouraging numbers for a Fed which has been fretting over the slowdown in business capex [capital expenditures]. Business capex rose at a decent q/q[quarter-to-quarter] pace in the first quarter,’ said Shepherdson.

Cailin Birch, economist with the Economist Intelligence Unit, believes that the decline in manufacturing in Q1 could cause a slowdown in US Q2 GDP.

‘We [The Economist Intelligence Unit] believe that recent softness in manufacturing indices is beginning to reflect the fact that demand growth is starting to flag, leaving producers in an increasingly difficult position. We expect these strains to be reflected in the second quarter,’ said Birch.

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