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The GPD’s strong start could spell trouble later in the year

Now the Fed has a bigger problem than it had last December, when the president started pressuring it not to raise interest rates.

Last Friday, the Bureau of Economic Analysis said that the nation’s economy — as measured by the gross domestic product — grew at a 3.2 percent annual rate in the first quarter.

The first problem is that amount of growth was way above the expectations that the “experts” had just last week. And, more importantly, it blew away the predictions of almost no growth that even the regional central banks had at the start of the year.

The Fed’s policy committee meets this week and while there’s no chance of a move in interest rates, the GDP number will have the governors thinking.

The first three months of 2019 were supposed to have been hurt by unusually cold and snowy weather in parts of the US, as well as a long government shutdown. But the economy apparently shrugged off those main problems and grew at a nice pace.

There are also a couple of other things that you need to understand. One is that this particular estimate of the GDP is filled with guesses. Look it up on the BEA Web site and you’ll see the table of contributing factors is filled with estimates.

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DylanThomas

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