U.S. Outlook: A first quarter GDP head fake
The words “fake news” come to mind with this morning’s Q1 advance GDP release.
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.