US 1st Quarter 2019 GDP higher than expected

CHICAGO – As late as Thursday, economists expected the US Gross Domestic Product to be around 2%, and being downgraded possibly as low as 1.8%. Most were surprised when the figure came out Friday morning at 3.2%.

As MarketWatch writes:

The numbers: Reports of the demise of the U.S. economy proved unfounded as first-quarter activity showed surprising strength. The U.S. economy expanded at a 3.2% annual pace in the first three months of 2019, the government said Friday.

The gain was well above forecasts. Economists polled by MarketWatch had forecast a 2.3% increase in gross domestic product. The economy grew at a 2.2% rate in the final three months of 2018.

Inflation moderated a bit in the first quarter.

MarketWatch lined up with Huntington Bank’s John Augustine’s predictions during TMA’s annual Economic Breakfast Thursday morning, in which Augustine predicated 2.0% GDP – but cautioned that the lower than last quarter’s figure did not indicate a recession on the way. 

“We think the first quarter GDP will be the lowest of the year, with the rest of the year higher,” Augustine told area manufacturers. “The general outlook for the US economy is optimistic.”

Current dollar GDP increased 3.8 percent, or $197.6 billion, in the first quarter to a level of $21.06 trillion. In the fourth quarter, current-dollar GDP increased 4.1 percent, or $206.9 billion, the U.S. Bureau of Economic Analysis reported Friday.

The price index for gross domestic purchases increased 0.8 percent in the first quarter, compared with an increase of 1.7 percent in the fourth quarter. The PCE price index increased 0.6 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 1.8 percent.

Additional information concerning personal income said:

• Current-dollar personal income increased $147.2 billion in the first quarter, compared with an increase of $229.0 billion in the fourth quarter. The deceleration reflected downturns in personal interest income, personal dividend income, and proprietors’ income that were partly offset by an acceleration in personal current transfer receipts.
• Disposable personal income increased $116.0 billion, or 3.0 percent, in the first quarter, compared with an increase of $222.9 billion, or 5.8 percent, in the fourth quarter. Real disposable personal income increased 2.4 percent, compared with an increase of 4.3 percent.
• Personal saving was $1.11 trillion in the first quarter, compared with $1.07 trillion in the fourth quarter. The personal saving rate — personal saving as a percentage of disposable personal income — was 7.0 percent in the first quarter, compared with 6.8 percent in the fourth quarter.