A Strange and Unexpected U.S. GDP Report

April 26, 2019

U.S. real GDP grew 3.2% at a seasonally adjusted annualized rate (SAAR) last quarter, which is close to a percentage point higher than was predicted. Year-on-year growth in the first quarter was also 3.2%. The acceleration of quarter-on-quarter growth to 3.2% from 2.2% SAAR did not stem from the usual suspects. Real final private domestic demand in aggregate contributed only 1.1 percentage points to GDP growth. Instead, exports rose 3.7% versus a 3.7% drop in imports, augmenting GDP growth by 1.03 percentage points. Faster inventory building contributed an additional 0.65 percentage points to GDP expansion, and a 2.4% advance in government expenditures accounted for 0.4 percentage points of GDP growth. During the Obama presidency, contrary to Republican complaints about excessive deficit spending, government expenditures habitually contracted. Faster GDP growth last quarter was accompanied by smaller on-year increases the personal consumption price deflator to 1.4% overall and 1.7% excluding food and energy. Each had climbed 1.9% in the year through 4Q18.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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