The Worst Best 1st Quarter GDP Report

It may be revised downward in the two revisions that will be made to last week’s first quarter U.S. GDP growth report but even if not, this was still a low-quality GDP report. Several one-time factors – lower imports, inventory buildup and higher Pentagon spending were key contributors to the surprising (well above consensus estimate) of first quarter GDP growth. Based on the one-offs, current quarter output is poised to slow. Arguably the single most important sub-component of GDP was soft in the 1st quarter and more consistent with 1 to 1.5% GDP growth. As the accompanying chart shows, final sales to private domestic purchasers rose only 1.3% on an annualized basis, the lowest in nearly a decade. Investment by businesses in equipment managed a meager 0.2% growth in QI. For my friends in the construction industry, fixed investment in private non-residential and residential structures each declined on an annualized basis. Despite the political cheering, I still hold to a sub 2% GDP growth in 2019.

Q1 2019 GDP

Explore posts in the same categories: GDP, GDP Growth, U,S, Economy, U.S. economy

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