Volatile trade, inventories boost U.S. growth to 3.2 per cent in first quarter GlobeBusiness
U.S. economic growth accelerated in the first quarter, but the burst in growth was driven by trade and the largest accumulation of unsold goods since 2015, temporary factors that are likely to reverse in the coming quarters.
Still, the mixed report could further dispel earlier fears of a recession that were stocked by a raft of weak economic data at the turn of the year. Those fears were also exacerbated by a brief inversion of the U.S. Treasury yield curve.The economy grew at a 2.2 per cent pace in the October-December period. Economists polled by Reuters had forecast GDP increasing at a 2.0 per cent rate in the first three months of the year. Growth has stepped down from a peak 4.
Exports surged and imports declined in the first quarter, leading to a small deficit that added 1.03 percentage points to GDP after being neutral in the fourth quarter. Trade tensions between the United States and China have caused wild swings in the trade deficit, with exporters and importers trying to stay ahead of the tariff fight between the two economic giants.
Inventories contributed 0.65 percentage point to first-quarter GDP after adding one-tenth of a percentage point in the October-December period.Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, slowed to a 1.2 per cent rate from the fourth quarter’s 2.5 per cent rate. The moderation in spending reflected a decline in motor vehicle purchases and other goods, likely related to a 35-day shutdown of the federal government.
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