The US economy kicked off the new year with a bang, overcoming a prolonged government shutdown, trade tensions and a global economic slowdown to deliver first-quarter growth that trounced analysts’ estimates.
Gross domestic product rose at an annualised pace of 3.2 per cent during the first three months of the year, an initial reading from the commerce department showed on Friday, handily topping Wall Street predictions for 2.3 per cent growth. It is also a leg up from the 2.2 per cent pace of expansion recorded during the fourth quarter.
The strong reading should reassure investors over the outlook for the US economy in 2019.
Recession fears
The world's most important economy had appeared to be poised for a sharp slowdown at the beginning of the year, with a run of weak economic reports suggesting first-quarter GDP growth could be as low as 0.2 per cent. Fears of a recession were heightened by a brief inversion of the US yield curve, while uncertainty over the direction of the global economy prompted the Federal Reserve to scrap plans to increase interest rates this year.
Since then, improving economic data, more dovish central banks and signs of progress on US-China trade talks have helped restore the confidence of consumers and investors. Just this week, both the S&P 500 and the Nasdaq Composite both re-entered record territory. – Copyright The Financial Times Limited 2019
