Reports of the demise of the U.S. economy proved unfounded as first-quarter activity showed surprising strength. The U.S. economy expanded at a 3.2% annual pace in the first three months of 2019, the government said Friday.
The gain was well above forecasts. Economists polled by MarketWatch had forecast a 2.3% increase in gross domestic product. The economy grew at a 2.2% rate in the final three months of 2018.
Inflation moderated a bit in the first quarter.
The acceleration in growth in the first quarter is all the more remarkable considering the doom and gloom that surrounded the first-quarter outlook in December. Before the new year began, the Atlanta Fed’s “nowcast” model projected 0.5% growth and the flattening of the yield curve was fueling talk of recession. The partial government shutdown, which limited economic data, added to unease.
Instead, the economic data improved steadily as the quarter progressed. Economists think the strong gain in retail sales in March bodes well for second-quarter growth.
Don’t tell Krugman…
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