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US Economy Grows 3.2 Percent in First Quarter of 2019 – Best in 6 Years

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On Friday, the Bureau of Economic Analysis reported on Friday that the US Gross Domestic Product (GDP) grew 3.2 percent in the first quarter, far above the expected 2.5 percent. It was the first time the GDP rose above 3 percent since 2013. More information will be released on May 30.

“The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures, private inventory investment, exports, state and local government spending, and nonresidential fixed investment,” the bureau’s report said.

The report included part of the 35-day government shut-down.

“Incomes are growing at a very high rate and consumption has not been,” Kevin Hassett, chairman of the Council of Economic Advisers, said. “Our expectation is that the shelves are being filled but they’re going be emptied out and production isn’t going to go down they way it normally does when you get an inventory spike.”

GDP is the total market value of all final goods and services produced within a country in a given period. It includes private and public consumption, private and public investment, and exports less imports. This doesn’t included parts to make the goods to avoid double counting. So, for instance, if a shoe is made in the US, and the laces in that shoe are also made in the US, only the completed shoe is counted, the laces are not.

“The American consumer is key to the U.S. economy,” Mark Zandi, a chief economist for Moody’s Analytics told National Public Radio. “We consume everything we produce and a lot of what everyone else produces across the globe. So if the American consumer is hanging tough, that’s good for our economy but also good for the global economy.”

While some analysts expect the economy to cool off, especially with the government shut-down, it’s showing no signs of slowing down. As a result, the Federal Reserve most likely will not lower interest rates.

White House economic adviser Larry Kudlow said Tuesday that he believes the three percent growth can be maintained.

“I know I may be at loggerheads with some of the forecasters and maybe even the consensus, but I really think this is going to turn out to be a pretty strong first half and a pretty strong year,” Kudlow told the National Press Club. He also said that a strong US economy an upper hand in trade negotiations with China.

President Trump, in Indianapolis addressing the NRA, said, “[The economic numbers] were far higher than even the high expectation. Our economy is doing great. … We’re knocking it out of the park, as they say. And we’re very happy about that,” he said.

Sarah Morton

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