April 29, 2019 — Q1 Growth Rate Smashes Expectations

APRIL 29, 2019 – Q1 GROWTH RATE SMASHES EXPECTATIONS

The Commerce Department announced the U.S. economy picked up steam in Q1 of 2019.  GDP grew at an annual rate of 3.2 percent, up from 2.2 percent at the end of last year, a turnaround from six weeks ago, when expectations were for GDP growth of 2 percent or less.

Economists predicted poor performance for Q1 due of the government shutdown and extremely cold weather causing delays in purchases.  Instead, a build-up of inventories, a jump in state and local government spending and a smaller trade deficit helped raise GDP to the best start of a year since 2015. 

Fears of a recession or severe downturn are abating with the ongoing strength in the employment market.  Slowdowns abroad seem to have had little effect on US economy. The IMF is predicting global growth will rise in the second half of 2019.  With consumers driving 70% of US growth, there are signs they are opening their wallets after a pullback in Q1. This should create a uptick in the spring to keep the economy rolling. 

Wages are rising above 3 percent, exceeding the cost of living and consumer sentiment remains high.  But the inflation rate is holding below 2 percent and shows signs of moving lower, which should keep the economy from overheating and the Fed from raising rates.

Rates are still relatively low, and by using an interest rate swap you can lock in these low rates before the Fed may be forced to act if the economy continues to improve faster than anticipated.

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