The U.S. economy reportedly grew at a rate of 3.2 percent annually in the first quarter of 2019.
According to the Commerce Department, gross domestic product (GDP) increased from the 2.2 percent recorded in Q4 2018 and surpassed the 3 percent mark U.S. president Donald Trump set as a marker to the workability of his economic programs.
As per the data, the jump in GDP from the rate seen between October and December last year can be attributed to two factors: a massive surge in stockpiling and a sharp decline in the trade deficit.
President Trump acknowledged the 3.2% growth in the economy in a tweet, calling it incredible. He noted that the U.S. economy was “doing well.”
The figures represent the strongest growth rate in the first three months of a year since last doing so in 2015. The U.S. GDP has over the last four years remained remarkably weak in Q1 in subsequent years.
Notably, the growth sets aside fears that 2019 could have seen figures well below 1 percent in the first quarter- mainly as a result of the crash in the stock market witnessed last December, the U.S.-China trade war, and the weaknesses being experienced in other leading global economies.
However, the economy seemingly was able to ride off these concerns. One major factor that played a huge role here was the Federal Reserve announcement at the start of the year regarding interest rates.
In 2018, the Federal Reserve raised rates up to four times. But it announced a pause this January, aftermath of which buoyed the stock market and saw major rebounds as concerns of a potential fall into recession eased.
Q1 saw 0.7 percentage points added to the economy via inventory rebuilding, with a further full percentage point aiding the economy as the trade deficit fell.
Meanwhile, growth in the consumer spending category slowed down to 1.2 percent, while government spending rose 2.4 percent during the quarter. Local and state spending was at 3.9 percent.
Economists have projected that the U.S. economy will grow by 2.4 percent in 2019, down from 2.9 percent in 2018. The decline is being pegged on the fact that improvements realized from tax cuts in 2017 and a hike in government spending since then will begin to fade considerably.