The US economy grew at a faster pace in the first quarter of the year than actually expected. It was also the best growth rate posted in the first quarter over the last four years. According to data released by the Bureau of Economic Analysis, the economy grew by 3.2% during this period. This was higher than economists’ estimates that were looking at a modest 2.5% growth. This was also the first since 2015 that first-quarter growth was able to surpass 3%. Many experts agree that improved net trade was crucial in pushing much of the growth. This means that US exports jumped while imports contracted significantly during the period under review. There was however a notable stagnation in personal spending which is crucial in maintaining GDP expansion.
The recent data showed that US exports were up 3.7%. On the other hand, imports declined by 3.7%. There was also a huge boost to the economy as a result of increased investments in intellectual property products. The data from the Bureau of Economic Analysis found that these investments were actually up by 8.6%. In addition to this, disposable personal income was also on the rise growing by 3% in the first quarter. But prices increased by 1.3% excluding food and energy.
The data released on Friday provided a fair outlook on how the US economy performed during and after the longest government shutdown in history. Large sections of the federal government had stopped working for 35 days after Congress and the White House failed to agree on a spending bill. The president was looking for significant funding for a border wall while Congressional Democrats made it clear that they will not approve such spending. Trump had to cave in the end and declared a national emergency in an effort to divert disaster funds to build the wall on the southern border.
Many investors were closely watching the report. There were fears that perhaps a possible recession was on the cards but it seems growth is actually very steady. Many analysts are confident that the positive report will go a long way in offsetting fears in Wall Street about possible slowed growth in the near term. The positive outlook also comes during a tough period in the global economy. Many major economies around the world are already slowing including China, which has been powering global growth for years.
The US is also engaged in tense trade negotiations with China in an effort to avert a colossal trade war. The fact that the economy was able to post a 3.2% growth under such difficult conditions is a huge plus for many investors. Additionally, inflation in the country is still low so it’s still too early to start worrying about any possible rate hike by the Federal Reserve. The US economy is expected to maintain steady growth for the remainder of the year. Whether it will top the first-quarter performance remains to be seen but it’s definitely a good start.