Please ensure Javascript is enabled for purposes of website accessibility
Economy Grew at Solid 3.1% Rate in Q1; Slowdown Expected
gvw_ap_news
By Associated Press
Published 5 years ago on
May 30, 2019

Share

WASHINGTON — The U.S. economy grew at a solid 3.1% rate in the first three months of the year, but much of that gain was based on temporary factors that will likely fade, leaving growth much slower in the current quarter.

The Commerce Department said Thursday that the first quarter advance in the gross domestic product, the economy’s total output of goods and services, rose sharply from a 2.2% increase in the fourth quarter as the economy overcame a partial government shutdown to weakness in overseas economies.

The new GDP estimate was down slightly from an initial 3.2% estimate. For the current April-June quarter economists believe GDP growth will slow to less than 2% and for the year they see GDP rising a modest 2.3%.

That forecast is far below the expectations of the Trump administration, which is projecting annual GDP gains averaging 3% over the next decade, gains that would be well above the 2.2% average GDP growth seen during the current 10-year expansion, which will become the longest in U.S. history in July.

Last year, the economy grew 2.9%, the best showing since a similar gain in 2015, but analysts believe much of that increase stemmed from the boost provided by the $1.5 trillion tax cut package passed in 2017, support they are forecasting will fade this year.

Two Factors Boosted First Quarter Growth

Some economists worry that the economy could falter even more than if trade tensions between the United States and China are not resolved. The move by the United States on May 5 to boost tariffs from 10% to 25% on $250 billion in Chinese goods after talks broke down has sent shockwaves through financial markets, with stocks down sharply this month as investors worry that a widening trade war will harm the U.S. and global economies.

“If the trade war escalates and the president follows through on his threat to raise tariffs on all Chinese imports … the risks of a recession will become very high.” — Mark Zandi, chief economist at Moody’s Analytics

Mark Zandi, chief economist at Moody’s Analytics, said he believes GDP growth will slow to 2.3% this year but that forecast is based on a truce in the coming weeks in the trade spat between the world’s two biggest economies.

“If the trade war escalates and the president follows through on his threat to raise tariffs on all Chinese imports, GDP growth will fall below 2% this year and unemployment will start to rise,” Zandi said. “The risks of a recession will become very high.”

The reason analysts believe growth will be much slower this quarter is that two factors that boosted first quarter growth — a big jump in stockpiling by businesses and a sharp contraction in the trade deficit — are not expected to last.

Even with the small downward revision, the 3.1% increase was the strongest first quarter gain since a 3.3% rise in 2015.

According to the small revisions in the new report, inventory growth and the shrinking trade deficit added slightly less support than initially reported. But consumer spending, which accounts for two-thirds of economic activity, showed more strength, growing at a 1.3% rate, still a slowdown from a 2.5% gain in the fourth quarter, but better than the 1.2% gain initially reported.

DON'T MISS

Caitlin Clark and Iowa Draw Nearly 5 Million Viewers for Second-Round NCAA Win

DON'T MISS

Canadian School Boards Sue Snapchat, TikTok and Meta for Disrupting Students’ Education

DON'T MISS

California Law Enforcement Agencies Obstruct Transparency Efforts in Use-of-Force Cases

DON'T MISS

No Police Charges for Taylor Swift’s Dad Over Paparazzi Incident in Sydney

DON'T MISS

Biden Administration to Lend $1.5B to Restart Michigan Nuclear Power Plant, a First in the US

DON'T MISS

Tonight’s Biden Fundraiser With Obama and Clinton Already Nets a Record $25 Million

DON'T MISS

Former Sen. Joe Lieberman, Democrats’ VP Pick in 2000, Dead at 82

DON'T MISS

Trump Criticizes Judge and His Daughter After Gag Order in Hush-Money Case

DON'T MISS

Police Had About 90 Seconds to Stop Traffic Before Baltimore Bridge Fell. 6 Workers Are Feared Dead

DON'T MISS

NBC Has Cut Ties With Former RNC Head Ronna McDaniel After Employee Objections, Some on the Air

No data was found

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

2 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

2 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

2 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

2 hours ago

Biden’s Fundraiser with Obama and Clinton Nets a Record $25 Million, His Campaign Says

3 hours ago

Fresno Unified’s Self-Protection Racket Is Hurting Our Kids

3 hours ago

Rockin’ Out or Laughing, the Valley Has Its Pick of Weekend Events

4 hours ago

Ex-Correctional Officer at Women’s Prison in California Sentenced for Sexually Abusing Inmates

6 hours ago

Caitlin Clark and Iowa Draw Nearly 5 Million Viewers for Second-Round NCAA Win

6 hours ago

Canadian School Boards Sue Snapchat, TikTok and Meta for Disrupting Students’ Education

7 hours ago

Cronenworth’s Big Hit Helps Lift the Padres to a 6-4 Win Over Melvin’s Giants

SAN DIEGO — Jake Cronenworth’s two-run double highlighted a four-run seventh inning for the San Diego Padres, who beat the San Francis...

1 hour ago

1 hour ago

Cronenworth’s Big Hit Helps Lift the Padres to a 6-4 Win Over Melvin’s Giants

1 hour ago

Shohei Ohtani Reaches 3 Times in Home Debut as the Dodgers Rout the Cardinals 7-1

2 hours ago

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

2 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

2 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

2 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

2 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

3 hours ago

Biden’s Fundraiser with Obama and Clinton Nets a Record $25 Million, His Campaign Says

MENU

CONNECT WITH US

Search

Send this to a friend