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U.S. economy growing much faster than expected

3.4% growth for first three months of 2019.

Posted: Apr 26, 2019 8:20 AM

WASHINGTON (AP) — The U.S. economy grew at a solid 3.2% annual rate in the first three months of the year, a far better outcome than expected, overcoming a host of headwinds including global weakness, rising trade tensions and a partial government shutdown.

The advance in the gross domestic product, the broadest measure of economic health, marks an acceleration from a 2.2% gain in the previous October-December period, the Commerce Department reported Friday. However, about half the gain reflected two factors not expected to last — a big jump stockpiling by businesses and a sharp contraction in the trade deficit.

Still, the GDP gain surpassed the 3% bar set by President Donald Trump as evidence his economic program is working. Trump is counting on a strong economy as he campaigns for re-election.

It was the strongest first quarter growth rate since 2015. In recent years, GDP has been exceptionally weak in the first quarter. There had been fears growth could dip below 1% this year due to a variety of adverse factors such as the December stock market nosedive, rising weakness in key economies overseas, the U.S. trade war with China and a 35-day partial government shutdown that ended in January.

But the economy shrugged off those concerns, helped by an announcement in early January from the Federal Reserve that after raising rates four times last year, it was declaring a pause on further rate hikes. That spurred a stock market rebound by easing concerns that the central bank might overdo its credit tightening and send the country into a recession.

Still, economists believe the current April-June quarter will not match the first quarter's performance. Many are looking for GDP growth to slow to around 2% in the current quarter.

In the first quarter, inventory rebuilding added 0.7 percentage point to growth, while a falling trade deficit boosted growth by a full percentage point. Analysts think both of those factors will reverse in the current quarter.

Consumer spending, which accounts for 70% of economic activity, slowed to growth at a rate of just 1.2% in the first quarter. In particular, spending on durable goods fell at a rate of 5.3%, the biggest decline in a decade, led by a sharp drop in light truck sales.

Government spending was up 2.4% as a big 3.9% gain in state and local spending, reflecting increases in highway construction, offset a flat performance for the federal government. The government estimated that the 35-day partial federal shutdown trimmed 0.3 percentage point from growth in the first quarter after trimming fourth quarter growth by 0.1 percentage point.

For the year, economists believe GDP will expand 2.4%, down from last year's 2.9% gain, as the boost from the 2017 tax cuts and increased government spending over the past two years start to fade.

The consensus view of private forecasters is well below expectations of the Trump administration which contends that its economic policies have broken a decade-long period when GDP gains averaged 2.2% annually. The administration is predicting growth will top 3% in coming years.

There are factors that could help lift growth in coming quarters. The global economy appears on better footing, given improvements in such major economies as China, and a trade war between the world's two largest economies that appears closer to being resolved than it did at the start of the year.

Mark Zandi, chief economist at Moody's Analytics, said he expects growth for this year to be around 2.2%, close to the average for the past 10 years.

"We got a temporary boost to growth last year because of the tax cuts but that money has been spent so we are back to the kind of growth we have had," Zandi said. "I think we are back to the 2% world we have been in since the recession ended."

The current recovery from the Great Recession of 2007-2009 is currently the second longest in history and will become the longest if it lasts past June.

But it has also been the slowest in the post-World War II period, a development economists attribute to slower growth in the labor force and weak gains in productivity.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 90017

Reported Deaths: 2017
CountyConfirmedDeaths
Hennepin25857922
Ramsey10492318
Dakota7125125
Anoka5753132
Stearns377023
Washington357355
Scott242633
Olmsted228727
Nobles193116
Blue Earth15986
Wright15337
St. Louis135234
Carver13517
Rice13018
Mower12864
Clay126140
Sherburne109314
Kandiyohi9312
Winona85018
Lyon6464
Waseca5328
Steele5212
Freeborn5163
Benton5113
Watonwan5054
Nicollet49916
Todd4792
McLeod4462
Chisago4441
Le Sueur4444
Crow Wing43318
Otter Tail3924
Beltrami3764
Goodhue3309
Martin3199
Pine2810
Itasca27713
Polk2734
Isanti2580
Douglas2491
Becker2442
Carlton2391
Cottonwood2190
Pipestone2129
Unassigned20952
Morrison2031
Dodge1990
Chippewa1921
Sibley1793
Meeker1772
Wabasha1740
Brown1732
Yellow Medicine1582
Murray1542
Rock1520
Mille Lacs1453
Redwood1400
Jackson1331
Faribault1320
Renville1286
Cass1253
Roseau1160
Swift1141
Pennington1121
Houston1100
Fillmore1080
Kanabec1058
Koochiching1053
Lincoln1020
Stevens931
Pope880
Hubbard820
Aitkin711
Big Stone680
Wadena650
Grant584
Wilkin553
Lake530
Norman510
Marshall491
Lac qui Parle460
Mahnomen451
Red Lake390
Traverse300
Clearwater260
Lake of the Woods201
Kittson120
Cook60

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 80106

Reported Deaths: 1256
CountyConfirmedDeaths
Polk15318256
Johnson499527
Woodbury498961
Black Hawk434986
Linn3783106
Story328617
Dubuque279840
Scott279727
Dallas269038
Pottawattamie200037
Buena Vista194712
Marshall176134
Sioux13503
Wapello126757
Webster119314
Clinton107018
Muscatine106452
Plymouth105220
Crawford10014
Cerro Gordo99621
Warren9286
Jasper76632
Des Moines7417
Marion7154
Tama69031
Carroll6345
Henry6074
Lee5967
Wright5621
Dickinson4856
Boone4677
Bremer4627
Washington43111
Louisa42515
Mahaska34019
Franklin33617
Delaware3353
Hamilton3143
Jackson3003
Floyd2983
Winneshiek2985
Clay2923
Benton2861
Hardin2761
Winnebago27111
Butler2592
Clarke2553
Emmet25210
Poweshiek2498
Lyon2483
Allamakee2455
Jones2443
Buchanan2421
Shelby2421
Clayton2323
Guthrie2235
Cedar2211
Chickasaw2210
Kossuth2190
Sac2140
Grundy2052
Madison2052
Cherokee1942
Fayette1911
Iowa1851
Mitchell1830
Howard1825
Harrison1782
Humboldt1733
Hancock1722
Calhoun1702
Mills1681
Palo Alto1600
Pocahontas1522
Monroe14810
Lucas1426
Page1420
Monona1381
Jefferson1341
Cass1332
Osceola1260
Appanoose1233
Taylor1231
Union1223
Davis1144
Van Buren1101
Worth1020
Ida970
Keokuk911
Fremont870
Greene870
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