U.S. Outlook: A first quarter GDP head fake

Scott Anderson
Posted by Scott Anderson
Chief Economist

The words “fake news” come to mind with this morning’s Q1 advance GDP release.Large container ship arriving in port.

The Bureau of Economic Analysis reported a blowout headline 3.2% annualized GDP growth rate in the first quarter of 2019, a solid improvement on the fourth quarter’s 2.2% growth performance. This is the best first-quarter GDP growth performance for the U.S. economy since 2015, breaking a string of three consecutive years of disappointment. On the surface, what’s not to like, right?

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on April 26.

Key observations:
  • Even on a year-ago basis, U.S. GDP growth has been impressive, finally accelerating to 3.2%.
  • This 12-month growth rate is right in line with the historical average for U.S. GDP going back to 1948, and well above the 2.1% average for the current economic cycle.
  • Business inventories increased by a whopping $128.4 billion in the first quarter and will need to be worked down in the quarters ahead.
  • We continue to forecast a sharp slowing in U.S. GDP growth in the second quarter to a 1.7% annualized growth rate, and our outlook for the second half of 2019 and 2020 remain unaltered by today’s upside GDP growth surprise.

Read my full report.

Reminder: All comments are moderated prior to publication and must follow our Community Guidelines.

Submit an Idea

[contact-form-7 id="32" title="Share An Idea"]

You are leaving the Bank of the West Change Matters site. Please be aware: The website you are about to enter is not operated by Bank of the West. Bank of the West does not endorse the content of this website and makes no warranty as to the accuracy of content or functionality of this website. The privacy and security policies of the site may differ from those practiced by Bank of the West. To proceed to this website, click OK, or hit Cancel to remain on the Bank of the West Change Matters site.