Friday, April 26, 2019

TRUMP DOES IT AGAIN: 3.2 GDP GROWTH IN 1ST QUARTER



The U.S. Bureau of Economic Analysis released its advanced estimate today for the first quarter of 2019 and it shows a whopping 3.2 increase in the Real Gross Domestic Product, despite dire predictions that the U.S. economy was headed for a slow down and/or a recession.

This exceed's expectations and comes as a welcome surprise, contrasting predictions that the economy was going to nose-dive, in part due to the Federal Reserve's raising of interest rates and other economic factors.

The BEA describes the news this way:

"...The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, state and local government spending, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP ... These contributions were partly offset by a decrease in residential investment..."

"...The acceleration in real GDP growth in the first quarter reflected an upturn in state and local government spending, accelerations in private inventory investment and in exports, and a smaller decrease in residential investment. These movements were partly offset by decelerations in PCE and nonresidential fixed investment, and a downturn in federal government spending. Imports, which are a subtraction in the calculation of GDP, turned down..."

Here are the details described in key categories:
" ...  Current dollar GDP increased 3.8 percent, or $197.6 billion, in the first quarter to a level of $21.06 trillion. In the fourth quarter, current-dollar GDP increased 4.1 percent, or $206.9 billion..." 
"...The price index for gross domestic purchases increased 0.8 percent in the first quarter, compared with an increase of 1.7 percent in the fourth quarter (table 4). The PCE price index increased 0.6 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 1.8 percent..." 
"...Current-dollar personal income increased $147.2 billion in the first quarter, compared with an increase of $229.0 billion in the fourth quarter. The deceleration reflected downturns in personal interest income, personal dividend income, and proprietors’ income that were partly offset by an acceleration in personal current transfer receipts..." 
"...Disposable personal income increased $116.0 billion, or 3.0 percent, in the first quarter, compared with an increase of $222.9 billion, or 5.8 percent, in the fourth quarter. Real disposable personal income increased 2.4 percent, compared with an increase of 4.3 percent..." 
Personal saving was $1.11 trillion in the first quarter, compared with $1.07 trillion in the fourth quarter. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 7.0 percent in the first quarter, compared with 6.8 percent in the fourth quarter... "

The news puts another feather in Trump's cap, adding to a continuing assessment that the President's actions on tariff's, his actions in negotiating trade deals to favor the U.S., his administration's persistent efforts to bring back jobs to the U.S. from overseas ventures, sparking new and additional investments, a favorable job/employment market, and renewed confidence in stock market trading, are having a positive impact on the economy.

The positive trend is significant in light of the President's political opponents' continually targeting the economy by pushing socialist policies, including raising taxes on the "wealthy," which includes large, productive, successful job creators in industry and other key areas of the economy, coupled with big government spending on give-away programs that traditionally do not favor a strong economy.

The good news also flies in the face of constant belligerent opposition to Trump by Socialist Democrats, who persist with their mantra of impeachment, despite exoneration of Trump by the Mueller investigators regarding the allegations of Russian Collusion.

The allegations and investigations appear to not have had a sufficient negative effect on Trump's efforts, and may indeed raise speculation, that if those political attacks had not taken place, how much more positive might our economy be at this time.

The 3.2 rise in GDP in the first quarter, is the strongest first quarter growth rate since 2015.

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