The US economy got off to a roaring start in the first quarter of 2019 — growing at a 3.2 percent clip despite continued trade tensions and slowdowns in consumer and business spending.
The gross domestic product gains — released Friday by the Commerce Department — were a full percentage point stronger than analysts had predicted. And it follows fourth-quarter GDP growth of 2.2 percent, bolstering hope that the growth will continue.
“It looks like there’s no stopping this economy,” Chris Rupkey, chief financial economist at Mitsubishi UFJ Financial Group, said in a note Friday, adding that the economic expansion is on pace to break new records in July.
The first-quarter figures, which are still subject to revisions, could prove a feather in President Trump’s cap going into the 2020 election as he is expected to campaign on his economic policies.
“Just out: Real GDP for First Quarter grew 3.2% at an annual rate. This is far above expectations or projections,” the Tweeter-in-Chief said Friday. “ Importantly, inflation VERY LOW. MAKE AMERICA GREAT AGAIN!” he wrote on his favorite messaging platform.
But while the headline number was strong — especially after a worrisome fourth quarter — some analysts noted that there were reasons to temper their exuberance.
Growth in consumer spending — which accounts for nearly 70 percent of the US economy — stood at 1.2 percent, down sharply from 2.5 percent in the last quarter as shoppers pulled back on vehicle
purchases.
Business spending also slumped sharply in the first quarter, standing at 2.7 percent, down from 5.4 percent in the fourth quarter. Business investment also slowed from the previous quarter, with agricultural machinery and office furniture posting the largest declines.
“We’re pleased to see a lot of negativity from last quarter not coming to fruition, but we would like to see more strength coming from the consumer,” Mona Mahajan, US investment strategist at Allianz Global Investors, told The Post.
Strong retail figures last month, on the other hand, offer some promise that spending growth will rise again, noted Brad McMillan, Chief Investment Officer for Commonwealth Financial Network.
“Future growth, therefore, depends largely on whether consumer spending and business investment recover and whether the trade balance and government spending stay at current levels,” McMillan said.
To be sure, Friday’s stronger-than-expected figures were a welcome relief in light of the doom and gloom overshadowing the economy at the end of 2018 when the stock market flirted with bear territory and the government entered into a partial shutdown.
“Rumors of the death of our economy have been greatly exaggerated,” Michael Antonelli, managing director at Baird, told The Post.
“Last December looks like one of the biggest overreactions to an ‘economic slowdown’ in decades,” he added.