U.S. economy grew 3.2 percent in early 2019, smashing expectations

[mahatmakanejeeves]

Source: Washington Post

Economy
U.S. economy grew 3.2 percent in early 2019, smashing expectations
The strong growth was driven by factors that economists don't think will last.

By Heather Long
April 26 at 8:40 AM

The U.S. economy expanded at a strong 3.2 percent annualized rate from January through March, the U.S. Commerce Department said Friday, blowing past expectations mainly because of companies beefing up their inventories and a smaller trade deficit, factors that aren't expected to last.

Better-than-expected growth, the ongoing strength in the job market and fresh stock market highs this week are allaying fears that a recession or severe downturn is on the horizon. The slowdown in Europe and China appears to have had little effect on the United States.

"The economy is not slowing nearly as much as people think," said Neil Dutta, head of economics at RenMac Research. "A 3.2 percent pace cannot be sustained, but the Federal Reserve and markets have probably cut their growth estimates too far for this year."

Many economists initially predicted anemic growth at the start of 2019 as the partial government shutdown and a rash of extremely cold weather caused many businesses and consumers to hit the pause button on big purchases, but forecasters raised their estimates to 2.3 percent as it became clear companies were re-stocking their shelves. Growth ended up coming in almost a full percentage point higher than expected, the best start to the year since 2015.

Over half of the strong first quarter growth was driven by a surge in inventories and U.S. exports to other nations. State and local government spending also boosted growth by the biggest amount in three years.
....

Heather Long is an economics correspondent. Before joining The Washington Post, she was a senior economics reporter at CNN and a columnist and deputy editor at the Patriot-News in Harrisburg, Pa. She also worked at an investment firm in London. Follow https://twitter.com/byHeatherLong


Read more: https://www.washingtonpost.com/business/2019/04/26/us-economy-grew-percent-early-smashing-expectations/

---

Let's go to the tape:

https://www.bea.gov/news/2019/gross-domestic-product-1st-quarter-2019-advance-estimate

EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, Friday, April 26, 2019
BEA 19-17

Gross Domestic Product, First Quarter 2019 (Advance Estimate)

Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the first quarter of 2019 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2018, real GDP increased 2.2 percent.

The Bureau’s first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The "second" estimate for the first quarter, based on more complete data, will be released on May 30, 2019.



The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, state and local government spending, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased (table 2). These contributions were partly offset by a decrease in residential investment.

The acceleration in real GDP growth in the first quarter reflected an upturn in state and local government spending, accelerations in private inventory investment and in exports, and a smaller decrease in residential investment. These movements were partly offset by decelerations in PCE and nonresidential fixed investment, and a downturn in federal government spending. Imports, which are a subtraction in the calculation of GDP, turned down.

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 (table 1 and table 3).

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 (table 4). 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.

{snip}

Next release, May 30, 2019 at 8:30 A.M. EDT
Gross Domestic Product, First Quarter 2019 (Second Estimate)
Corporate Profits, First Quarter 2019 (Preliminary Estimate)

[Calista241]

1. I wonder how fast it would have grown without the shutdown in January. n/t

[bedazzled]

2. Amazing there is "growth" with all these stores closing

And farmers going bankrupt. Just amazing. Ah ststistics

[at140]

31. Online buying growing faster

Than brick & mortar slowdown. Reason I buy on eBay is because the oddball stuff I need is hard to find in stores. Also saves wear and tear on my car and most of the time cheaper than store prices.

[bedazzled]

39. Oh this is true

But people without jobs can't buy stuff... I guess if you work for minimum wage you don't buy much anyway.

[at140]

42. Unemployment is low right now

which may be the reason on-line sales are high, working people have less time to shop at stores.

[Doodley]

3. My personal finance are doing very well, but I won't mention that I"m having to borrow money and I"m

spending more than I'm making.

[at140]

43. It is the American way!

Americans borrow for cars, houses, home improvements, even vacations.
Credit cards make it very easy to borrow.

[Doodley]

57. It was an analogy to how the economy is doing.

Of course an economy will grow if you borrow enough, but that is just saving up trouble for the future. 3.2% doesn't mean anything when the deficit/debt is soaring.

[at140]

58. I am with you on the debt/deficit issue but..

The sheeple are fat and happy if they have a job which gives them credit cards so they can spend to their hearts content, never mind they are piling up debt.

Sheeple never think long term.

[at140]

59. Agree 100% but

The Sheeple don't think long term, so long as they have a job to acquire more credit cards, they are happy!

[FBaggins]

50. Sarcasm?

How can your personal finances be doing very well if you're spending more than you're making?

[Doodley]

55. It was an analogy to how the economy is doing.

Of course an economy will grow if you borrow enough, but that is just saving up trouble for the future.

[StillFeelingTheBern]

54. A joke right?

Your personal finances aren't doing well if you are spending more than you make.

[Doodley]

56. It was an analogy to how the economy is doing.

I don't borrow anything. My finances are terrible!

[groundloop]

4. Apparently the full tRump effect hasn't kicked in yet

I work in a manufacturing plant, we just laid off 1/4 of our hourly workforce because of decreased demand. I'm sure those people will be glad to hear that (on paper anyway) the economy is doing well.

tRump is still benefiting from actions President Obama took to strengthen our economy.

[no2trump]

5. These numbers are not real

[mahatmakanejeeves]

11. Thank you for that insight, and welcome to DU. NT ("NT" means no text in the "Message text:" box.)

[CountAllVotes]

18. Welcome to the Democratic Underground no2trump!!

there no2trump!!

Welcome to the Democratic Underground!!!

Glad to see you here & many welcomes indeed!!!

: : : :

[Mystery sage]

30. Yep the books are getting cooked

We just won't know until we kick him out.

[erpowers]

45. What Do You Mean?

How are these numbers not real?

[no2trump]

46. Money has been flooding the economy, but we are told no inflation - FALSE

But 90% of this money is going to the rich, and there is only so much stuff they can buy. So they buy stocks. This is creating greater demand for stocks. So, their prices go up because of greater demand. The rising stock market is not a measure of the economy but only the result of inflation in the market. The rising market is included in the measure of the economy, so it is included in the GDP number. For the real economy look around you, how are you and your neighbors doing personally. Other reasons numbers are not real are in this video.

<iframe width="640" height="360" src="

" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

[erpowers]

47. Take the Stock Market Out of GDP

So, is there any way to take the stock market out of the GDP calculation? Could Congress write a law to prevent stock market gains from being a part of the GDP calculations? Could the President sign an executive order separating the stock market and GDP? Could the Federal Reserve change rules so that stock market increases are not counted as a part of GDP calculations? I realize that none of the individuals, or groups listed above may want to change the system, but can they change the system?

[mahatmakanejeeves]

48. "The rising stock market ... is included in the GDP number."

The rising stock market is not a measure of the economy but only the result of inflation in the market. The rising market is included in the measure of the economy, so it is included in the GDP number.

Cite your source for this, please. Prepper lunatics do not count.

Thank you.

Gross domestic product

Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually.

Economic Indicators: Gross Domestic Product (GDP)

By Roger Wohlner

12. Economic Indicators: Gross Domestic Product (GDP)

The gross domestic product (GDP) is a comprehensive scorecard of the country’s economic health. As an aggregate measure of total economic production for a country, GDP represents the market value of all goods and services produced by the economy during the period measured, including personal consumption, government purchases, private inventories, paid-in construction costs and the foreign trade balance (exports are added, imports are subtracted).

GDP consists of the total value of the nation’s production and is made up of purchases of domestically produced goods and services by individuals, businesses and the government.

On a quarterly basis, GDP is often presented on an annualized percent basis. Most of the individual data sets will also be given in real terms, meaning that the data is adjusted for price changes, and is therefore net of inflation.
....

What is GDP and Why is It So Important to Economists and Investors?

BY LESLIE KRAMER Updated Feb 21, 2019

The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period, often referred to as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the Q3 2018 GDP of a country is up 3%, the economy of that country has grown by 3% over the third quarter. While quarterly growth rates are a periodic measure of how the economy is faring, annual GDP figures are often considered the benchmark for the size of the economy.

In the United States, real GDP increased at an annual rate of 2.6% in the fourth quarter of 2017, according to figures released by the Bureau of Economic Analysis. For all of 2017, GDP grew 2.3%. Current-dollar GDP increased 4.1%, or $762.3 billion, in 2017 to a level of $19,386.8 billion. ... The countries with the largest GDP in descending order are 1. The United States, 2. China, 3. Japan, 4. Germany, 5. The United Kingdom, 6. India, 7. France, 8. Italy, 9. Brazil and 10. Canada.

Measuring GDP can be complicated, but, at its most basic, the calculation can be done in one of two ways: either by adding up what everyone earned in a year (income approach) or by adding up what everyone spent in a year (expenditure method). Logically, both measures should arrive at roughly the same total. ... The income approach, which is sometimes referred to as GDP(I), is calculated by adding up total compensation to employees, gross profits for incorporated and nonincorporated firms, and taxes less any subsidies. The expenditure method is the more common approach and is calculated by adding total consumption, investment, government spending and net exports.

As one can imagine, economic production and growth – which GDP represents – have a large impact on nearly everyone within that economy. For example, when the economy is healthy, there will typically be low unemployment and wage increases as businesses demand labor to meet the growing economy. A significant change in GDP, whether up or down, usually has a significant effect on the stock market. It is not difficult to understand why; a bad economy usually means lower earnings for companies, which translates into lower stock prices. Investors often pay attention to both positive and negative GDP growth when assessing an investment idea or devising with an investment strategy.
....

[INdemo]

6. I think these are Bullshit numbers coming from

the Trump administration officials that would report anything to keep the Nazi propped up.When we have plant closings, the job numbers were down and yet we have 3.2% Economic Growth.
Not.

In fact knowing what we know now about the guy running the labor department I don't believe the job numbers were accurate going back to Jan 20 2017

Com

[mahatmakanejeeves]

8. The numbers did not come from the Bureau of Labor Statistics (BLS), which is part of

the Department of Labor. They came from the Bureau of Economic Analysis (BEA). I edited the 0P to include that information as my remarks. The BEA is an agency in the Department of Commerce, which is run by Wilbur Ross.

I see, belatedly, that the BLS finally has a commissioner, William W. Beach, replacing, at long last, the acting commissioner, William J. Wiatrowski.

And a heads-up: "The Employment Situation for April 2019 is scheduled to be released on May 3, 2019, at 8:30 A.M. Eastern Time."

[aggiesal]

19. I completely agree that these numbers can't possibly be real ...

With the government shutdown and the non-tax returns being felt
but just about everyone, what money are people spending to prop
up this economy?

[mahatmakanejeeves]

7. Nit to pick: the GDP did not grow 3.2 percent in the first quarter of 2019. It

"increased at an annual rate of 3.2 percent."

That's different.

[bedazzled]

9. Dump I work in is cutting hours

The new CEO is hiring all of his friends. The intention is to ruin the company and it is working well. Takes getting rid of a lot of 8.40 hour employees to pay a lot of 85,000 a year salaries, which is considered high pay here

[ancianita]

10. Probably the FINANCIAL economy, with outputs outside US borders. This is momentum from 2011.

The financial level only somewhat depends on the work/production level below it, where the real national economic numbers are with the working class, with 4 out of 5 people living paycheck to paycheck.

No need to report complicated economics that credit the previous president, right?

[Roland99]

12. Uh...yeah...no...not so rosy as it looks on the surface!!

GDP ‘stomped’ estimates, but some factors appear unsustainable, economists say
https://www.marketwatch.com/story/gdp-stomped-estimates-but-some-factors-appear-unsustainable-economists-say-2019-04-26?mod=mw_theo_homepage

“GDP stomped estimates, coming in at 3.2%, but the first quarter report was marked by unusual data that inflated it temporarily — mainly short-term boosts from higher inventories and from trade (which added one percentage point alone). If you factor out those one-offs, you get GDP rising at just 1.3%, as measured by ‘final sales to private domestic purchasers.’” — Robert Frick, Navy Federal Credit Union.

...

• “On the price side, both the GDP deflator and core PCE price index were a little below expectations, still indicating that despite solid growth there is little in the way of inflationary pressure. However, even with that these strong growth numbers certainly don’t justify current market pricing for a possible cut by the Fed, and as such today’s release should be positive for the US$ and negative for fixed income.” — Andrew Grantham, CIBC Economics.

• “Not as good as it looks. While the headline figure was stronger than expected, “strength” was due to faster inventories (an unsustainable pace) and net exports (a narrower trade deficit as trade policy shifted imports ahead).” — Scott Brown, Raymond James & Associates.

[Yavin4]

13. This is actually bad news.

Interest rates are still low by historical standards, and in the first quarter, the Fed announced that there would be no hikes for the rest of the year because they feared a recession. Their announcement may have boosted first quarter GDP.


Now with this report, rising inflation is the greater threat. The Fed has no other choice but to raise rates.

[Cryptoad]

14. If all this economic growth is taking place,,,,

it happening somewhere besides here..... and I know these Trumpeters would not cook the books,,,!

[Dopers_Greed]

15. The economy now reminds me of the 2005-2007 economy, but worse

Everything looks good on paper, but everyone's accruing a massive amount of debt, and it's incredibly hard to find a job.

What makes it worse this time is the skyrocketing cost of living, and several major industries are on the brink of collapse (farming, retail, auto manufacturing).

[Yavin4]

24. "it's incredibly hard to find a job." Disagree with you on this.

You can find a job easily in this economy. Finding one that pays you at, or above, the cost of living is a different story entirely.

[Agschmid]

28. Yup.

[Yavin4]

33. If you drive for Uber or deliver food, you have a job.

Good luck supporting yourself, let alone a family, on that income.

[Dopers_Greed]

36. Yes, I agree

I was referring more to decent-paying jobs.

I make right at the median income in my area, and still feel like I'm scraping by.

As a single person, it's impossible to buy a house.

[at140]

44. True dat, all my bro-in-laws are employed!

That is a rare occurrence.

[at140]

32. Nailed it! Party on with borrowed money!

It is same as looking prosperous to your neighbors when you keep adding to your credit card debt.

Business debt, government debt, student debt, consumer debt, mortgage debt, etc etc are AT ALL TIME HIGHS!

I get the feeling I am listening to Mozart played by orchestra on the deck of Titanic, after she hit the iceberg.

[hack89]

38. As a hiring manager I can tell you that it is very easy to find a job

The price of hiring well qualified technical people is going through the roof.

[theophilus]

16. Very suspect from what I heard. On S. Ruhle this a.m. she

what touting the numbers but her reporter, while saying the number was good, poured some cold reality on the figure. He said that consumer spending was actually down and some other dampers. He said that this number was the result of the tax cut and a large increase in military spending on things like planes. He used the word Keynesian. She, good-naturedly, said she would cut him off with that remark. So, I think this is pretty much B.S. but it is the kind of B.S. that is going to make it harder on the Democrats unless truth starts being told in a louder way.

[mahatmakanejeeves]

17. New headline at WaPo: "U.S. economy grew 3.2 percent in early 2019, surpassing expectations" NT

It's no longer "smashing expectations." It's "surpassing expectations."

[Matthew28]

20. If this is still like this in mid 2020

Trump will be reelected

[Doreen]

21. The county I live in has not shown any progress

in a better economy. In fact it keeps looking worse. This chart must be a chart from a parallel dimension or in another state...maybe.

[beachbum bob]

22. who can believe ANY Govt data that comes from trump admin??

I know I won't

[Ron Obvious]

23. Maybe. But GDP is a rather poor measure of actual economic wellbeing

Everywhere you look, the cost of living (e.g. housing, education, healthcare) is vastly outpacing income gains, but supposedly there is no inflation.

JFK said something along the lines of allowing companies to dump their toxic waste in the rivers is great for GDP: It saves the company money, money must be spent by the taxpayers to clean it up, and additionally money is spent treating the resulting cancers and other illnesses. That's three big wins for GDP, but not a desirable outcome.

[Turbineguy]

25. I estimate

I'll win the Powerball tonight.

[crazytown]

37. 2 3 11 20 59 *45

[Turbineguy]

40. Larry Kudlow

can change those in the wink of an eye.

[crazytown]

41. Can't be changed

Tuesday = 2
3rd day = 3
November = 11
20th Year of Millennium = 20
59th Presidential Election =59
45 Out on his ear = *45

And they’re winners. Throw the bum out.

[Iliyah]

26. Anything that comes from the tr-ump administration

is subject to be false.

[Kurt V.]

27. Isn't heather long the one that made a fool of herself at davos. just sayin.

[Gothmog]

29. These are good numbers for turmp and trump could win in 2020 if economy is strong

We have to defeat trump. There is a very good chance that trump will win if we pick a weak or unsafe choice. There are posters who believe that we can nominate the most liberal/socialist nominee as possible and that candidate will easily win because everyone hates trump. It is their position that this is a historic opportunity to nominate someone would otherwise not be electable.

From Larry Sabato https://www.washingtonpost.com/opinions/the-economy-got-nixon-reagan-and-bush-reelected-it-could-do-it-for-trump-too/2019/04/23/b8920d34-65e6-11e9-a1b6-b29b90efa879_story.html?utm_term=.a35b315730d2

Ultimately, Trump may turn out to be at the mercy of conventional factors. In 2016, academic predictive models based on fundamentals such as the state of the economy suggested that Trump, or any other Republican candidate, was in position to win the election or come very close. This time, such models (once they become operative next year) could make Trump the early favorite despite his poor approval ratings.

Credit the powers of incumbency and a strong economy, the state of which may matter more to Trump’s odds than nearly anything else. Incumbency and the economy, among other matters, ended up being more than enough for Nixon, Reagan and Bush. Despite Trump’s unprecedented outlandishness, that same combination might work for him, too.

Most POTUS are re-elected if the economy is good. Here is a scary study that shows this

Link to tweet

There are good reasons to doubt this study

Link to tweet

I do not believe that trump is assured of winning. If we want to win, Democrats need to nominate a strong nominee who is NOT too far out of the mainstream

[at140]

34. How about a woman, under age 65, non-white and mainstream?

Klobuchar is white.
Warren is late 60's.
Harris is not thought of as centrist.

I guess it has to be Tulsi!!

[Gothmog]

35. I like Klobuchar, Warren and Harris and believe that they are all electable

Harris and Klobuchar in particular are very electable in my opinion. I personally really like Senator Harris

[mahatmakanejeeves]

49. OT: Here's the new BLS Commissioner:

William Beach

Former Vice President of Policy Research

On March 28, 2019, William Beach became the Commissioner of the Bureau of Labor Statistics (BLS). You can read more about the announcement here.

William Beach was a vice president at the Mercatus Center at George Mason University from February of 2016 to March of 2019. Before joining Mercatus, Beach served as the Chief Economist for the Senate Budget Committee, Republican Staff. Prior to that position he was the Lazof Family Fellow in Economics at Heritage and director of the Foundation’s Center for Data Analysis (CDA). As CDA Director, Beach oversaw Heritage’s original statistical research on Social Security, crime, education, trade and a host of other issues. He was instrumental in developing the state-of-the-art econometric models Heritage uses to estimate, in detail, how, for example, proposed tax changes will likely affect individuals, families, and various business sectors-as well as the overall national economy. Prior to joining Heritage in 1995, Beach served as a senior economist in the corporate headquarters of Sprint United, Inc., and, from 1991, as the president of the Institute for Humane Studies at George Mason University. A graduate of Washburn University in Topeka, Kansas, Beach also holds a master’s degree in history and economics from the University of Missouri-Columbia and a Ph.D. in Economics from Buckingham University in Great Britain. He also is a Visiting Fellow in Economics at Buckingham.

[AJT]

51. Sorry, it might be me.....I bought a lot of cool stuff this year....

[Gothmog]

52. These numbers could help trump

Link to tweet

[StillFeelingTheBern]

53. Mixed feelings here

With numbers like these, someone somewhere must be doing better. I know my area in Louisiana has been booming the past 18-24 months but that could also be attributed to oilfield success spurring the economy. I know there are also millions of people across the country that haven't felt an ounce of improvement despite the high GDP numbers.

The unfortunate truth is that Trump likely get re-elected if these numbers are this high for the next 18 months.