US Economy is Growing Faster Than Expected

While the stability of the United States economy has been pretty uncertain this year, consumer and business spending have been, at that has led to a 2.6 percent growth in the economy since last year. This is better than the 2.3 percent analysts had originally estimated.

Perhaps more importantly, though, this metric also appears to have bested the real-time tracker monitored by the Federal Reserve Bank, called GDPNow. This tracker estimated a growth of only 1.8 percent, which it based on drooping retail numbers that suffered—at least in part—from the government shut down. 

Alliance Investment Management senior investment strategist Charlie Ripley comments, “Overall, with expectations fairly low going into this repost, this was a positive surprise that should reinforce the overall health of the US economy for investors.”

The fourth quarter GDP release, by the US Bureau of Economic Analysis was also delayed—by nearly a month—because of the 35-day partial government shutdown at the end of last year.  However, after this longest shutdown in US history, we can now see the report, which indicates an estimated 2.9 percent increase. This is better than the 2.2 percent growth, last year, but still not quite the 3 percent promised by the Trump administration. 

In addition, personal consumption grew 2.8 percent, but was still lower than the 3 percent that had been expected or the 3.5 percent rate from the previous quarter. 

As such, chief economist Mark Hamrick comments, “For the full year, growth was impressive, but the outlook for 2019 is expected to be more muted between fading global prospects, less lift from the tax cut and the clouds surrounding Brexit and US-China trade.”

Indeed, the trouble the US economy is experiencing is complicated.  For one, US retail sales recorded their biggest drop in more than nine years, in the middle of February. This has led to fears about a pending economic slowdown. Furthermore, the United States Department of Commerce explains that retail sales fell 1.2 percent, which is the largest decline since September of 2009.  Coupled with Brexit concerns as well as the instability of the US-China trade relationship, the future of the US economy—while growing—is quite in flux. 

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