Economy Grows 3.2 Percent During First Quarter Outpacing Expectations.

By Mairead McArdle

 

The economy grew 3.2 percent during the first quarter of this year, beating analysts’ and investors’ expectations, according to data released Friday by the Bureau of Economic Analysis (BEA).

Economists had expected a first-quarter showing of 2.5 percent GDP growth, only slightly higher than the 2.2 percent growth in the last quarter of 2018. Instead, GDP grew 3.2 percent, marking the economy’s best first-quarter performance since 2015.

The BEA attributed the favorable growth rate to exports as well as better state- and local-government spending. Disposable personal income increased by 3 percent in the first quarter, while prices rose 0.8 percent.

Imports sank by 3.7 percent and exports increased by the same amount. At the same time, some potential warning signs also appeared in the report, including a 50 percent drop in the business-investment rate despite 2017’s tax cuts.

The growth rate also defied expectations that the economy would suffer more seriously from the record-breaking 35-day partial government shutdown earlier this year, as well as fears that global growth was sputtering.

President Trump’s tariffs on China had particularly worried investors, with even the White House saying that American companies may see their earnings projections take a hit because of them.

“It’s not going to be just Apple,” top White House economist Kevin Hassett said in January. “I think that there are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year until we get a deal with China.”

 

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