For the first quarter of 2019, US economic performance as measured by the GDP comes in at a strong 3.2% and blows away all expectations by economists who on average predicted a 2.5% rate for the first quarter. Economist consensus on the GDP are rarely accurate in any case and historically there may be minor revisions to GDP numbers. What makes this number so astounding is the number of headwinds that the US economy is sailing against to include the economic slowdown in the rest of the world. The European economies have ground to a halt while China is having its slowest growth in decades. Despite the lackluster global results, the US economy continues to chug forwards.
The fears of a possible US recession that led to the stock market downturn in December of 2018 was completely overblown and without merit. The US stock markets have returned to its climb in reaching all-time highs. The US Fed which caused much of the macroeconomic fear in 2018 has officially backed off its plans to hike interest rates.
Many had predicted that the Trump tax cuts in January of 2018 would fizzle out and the economy would stagnate but that has been proven false.
Those who predicted an economic downturn due to the trade dispute with China are also wrong. Other fears include an anemic first quarter of 2019 and an “earnings recession” is equally false. The likely reason these false narratives could possibly have something to do with wishful thinking on the part of those who wish for economic bad news to bolster the Democrats’ chances of retaking the White House in 2020.
The GLM economic forecast for 2019 is that the US economy will be hampered by global trade issues and economic downturns in economies across the globe. However, the US corporations and consumers will remain strong so domestic growth will form the bedrock of the economy. It is possible and likely that the GDP for year end 2019 could end around 3%.
