The United States gross domestic product (GDP) charged ahead in the first quarter of 2019 to post a positive annual rate of 3.2%.
The upbeat expansion data was announced on Friday by the U.S. Commerce Department.
The rate was significantly better than most economists expected, and far better than the dour forecasts of early this year, when many believed the economy would be nearly stalled in growth.
Economists warned that the report was inflated by short-term factors and probably overstated the underlying pace of growth. Most anticipate a down-shift as the year progresses, and hardly any independent economists expect that President Trump will be able to deliver the 3% growth he has promised for this year.
But the fact is that, after a rough winter, the economy appears to have entered the spring fundamentally intact. Stock-market turmoil, a partial government shutdown and a crippling “polar vortex” failed to bring the decade-long recovery to an end.
And with the job market still strong and consumers confident, fears of a recession appear to have been set aside.
“The angst has settled, and the economy has come back,” Ben Herzon, an economist with Macroeconomic Advisers, a forecasting firm said. “I just can’t point to anything now that’s going to push us into recession.”
“We’re knocking it out of the park,” Trump told reporters as he left the White House Friday morning for an event in Indianapolis.
Friday’s report could also lead Trump to ease his pressure on the Federal Reserve, which he has recently criticized for failing to do enough to support the economy.
The first-quarter growth figure was inflated by a buildup of inventories and by a steep decline in imports. Both trends are likely to reverse in the second quarter. Imports count as a negative in GDP accounting, so a decline in imports makes growth look stronger. Exports, which add to the GDP rose significantly.
Consumer spending has been the bedrock of the recovery, staying strong even as other sectors have ebbed and flowed. So economists were nervous when spending tumbled unexpectedly in December and failed to rebound in January.
Since then, the picture has become brighter. Consumer confidence, which fell sharply in December and January, quickly recovered once the shutdown ended and financial markets stabilized. Retail sales bounced back strongly in March.
Economists do expect growth to slow this year, as the effects of tax cuts and government spending increases fade. But they are less nervous than a few months ago, when markets were in turmoil, trade tensions were flaring up and the Federal Reserve seemed uncertain about which way to turn.