Q1 GDP Grew by 2.3%

This morning, the government said the economy grew by 2.3% in Q1. Economists has been expecting growth of 1.8%. Spending by consumers rose by just 1.1%.

The economy grew at a 2.9 percent pace in the fourth quarter. Economists polled by Reuters had forecast output rising at a 2.0 percent rate in the January-March period.

The first-quarter growth pace is, however, probably not a true reflection of the economy, despite the weakness in consumer spending. First-quarter GDP tends to be sluggish because of a seasonal quirk. The labor market is near full employment and both business and consumer confidence are strong.

Economists expect growth will accelerate in the second quarter as households start to feel the impact of the Trump administration’s $1.5 trillion income tax package on their paychecks. The tax cuts came into effect in January.

Lower corporate and individual tax rates as well as increased government spending will likely lift annual economic growth to the administration’s 3 percent target, despite the weak start to the year.

Here’s quarterly growth in real GDP:

Here’s a look at rolling NGDP growth. It’s been close to 4% for several years.

Posted by on April 27th, 2018 at 11:51 am


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