Financial Planning Newsletter May 2019
May 20, 2019
First Quarter GDP Beats Expectations, but May Not Tell the Whole Story
The U.S. economy beat all estimates and grew by 3.2 percent in the first three months of the year, putting to rest fears of an imminent recession. December saw severe market volatility and a government shutdown that continued into the new year. These factors had many worrying that we would join the rest of the globe in sluggish economic growth.
While Q1 may have bucked expectations, it does not paint an entirely rosy picture. Much of the GDP growth was driven by business inventories. Amidst ongoing trade tensions, American businesses are stockpiling now, and producing more than they are selling. While this created a boost in Q1, it may hinder GDP in future quarters as the supply on hand exceeds demand for new production.