Better-than-expected growth, ongoing strength in the job market and an all-time high in the stock market are inviting comparisons to the record 1990s boom
By Heather Long Heather Long Economics correspondent Email Bio Follow April 26 at 8:38 PM The U.S. economy expanded at a strong 3.2 percent annualized rate in the first quarter of 2019, the government reported Friday, blowing past expectations and prompting celebration among President Trump and his advisers.
Many economists had predicted anemic growth at the start of the year, as the partial government shutdown, market jitters and extremely cold weather caused many businesses and consumers to hit the pause button on big purchases. But forecasters raised their estimates as it became clear some one-time factors would temporarily lift the economy.
Some experts, including at the Federal Reserve, forecast growth will slow to about 2 percent, similar to the Obama years, while other see growth sticking closer to 2.5 percent, which would be noticeably above trend. But there is broad agreement that a recession looks increasingly unlikely ahead of the election in November.
Gallup polling found similar results with half of Americans giving the economy an “excellent” or “good” rating lately, the most upbeat assessment since 2001. The other typical response in times of trouble is for the Federal Reserve to cut interest rates, but there is much less scope to do that now than there was 20 years ago.
“Today’s economy is not anywhere close to the late 1990s,” said Joseph Brusuelas, chief economist at accounting firm RSM. “We are not seeing the increases in productivity and wages that we saw in that period when everyone called Alan Greenspan the ‘maestro.’ ” But the president’s top economic advisers say they are revising their growth forecasts even higher after examining the data. They believe growth would have been 3.5 percent in the first quarter without the shutdown and that consumption will pick up later this year.
After a big buying spree in the winter, companies are unlikely to keep expanding their inventory this spring, meaning second-quarter growth could take a hit. The unusual jump in U.S. exports is also likely to be hard to sustain. If the trade deficit widens in the second quarter, that would also be a drag on growth.
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