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

Posted By Scott Anderson In Economic Outlook | No Comments

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 [1], 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. [1]

Article printed from Bank of the West: https://changematters.bankofthewest.com

URL to article: https://changematters.bankofthewest.com/2019/04/26/u-s-outlook-a-first-quarter-gdp-head-fake/

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[1] U.S. Outlook: https://changematters.bankofthewest.com/wp-content/uploads/2019/04/BankoftheWest_USOutlook_04_26_19.pdf

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