The U.S economy posted a strong first quarter, with growth at a 3.2 percent annual rate – grossly beating out Wall Street’s 2.5 percent projected growth for the first three months of 2019.
Gross domestic product (GDP) – the total value of goods produced and services provided in a country annually – showed its best first quarter increase since 2015. Recent history shows exceptionally weak GDP growth during the first quarter. This quarters 3.2 percent growth rate marks an acceleration from a 2.2 percent gain in the final quarter of 2018.
The GDP gain outpaced the 3 percent bar set by President Trump – which his predecessor Barrack Obama said he would need a magic wand to hit. Trump’s ability to hit this mark only serves as further proof that his economic policies are working.
Disposable personal income rose by 3 percent with an overall price growth of only 0.8 percent. Inventory rebuilding added 0.7 percentage point to growth, while a falling trade deficit provided a healthy full percentage point boost. Consumer spending, accounting for 70 percent of all economic activity slowed, showing a first quarter growth rate of only 1.2 percent. Spending on durable goods fell at a 5.3 percent decline, the largest drop in a decade, headed by a stall in the sale of light trucks.
There had been some fear that growth could drop below 1 percent this year as a result of a number of adverse factors including the December stock market plunge, prominent oversea economies showing signs of weakness, the U.S/ China trade war and a partial government shutdown that lasted 35 days. All of these detrimental factors make the U.S. economy’s ability to post an impressive first quarter growth rate even that much more promising. A helping hand was provided by an early January announcement by the Federal Reserve that after raising interest rates 4 times last year, it was placing a pause on further rate hikes. This jumpstarted a stock market rebound led by eased concerns that the central bank might overdo its credit tightening and send the country into a recession.
These figures being released led to a response in the form of a well warranted celebratory tweet by President Donald Trump.