https://www.wsj.com/articles/the-tide-keeps-rising-11556319160
With the comeback in financial markets this year, we probably should have seen it coming. But the headline rebound in first quarter growth to 3.2% reported Friday is still a pleasant surprise that shows again that the U.S. economy is remarkably resilient when government doesn’t get in the way.
The Keynesians who predicted an imminent recession are pointing out flaws in the GDP details, and they’re right that volatile categories like net exports (1.03%), inventory growth (0.65%) and state and local government (0.41%) contributed substantially to growth. Strip out those categories and growth would have been 1.3%.
Yet the government shutdown took some 0.3% off growth and that won’t be repeated in the second quarter. Auto sales took 0.49% off GDP in the quarter, but sales rebounded in March heading into the second quarter. Overall consumer spending contributed a relatively small 0.82% to GDP, perhaps due to the fall in consumer confidence after the stock market swoon in the last months of 2018. With job growth strong and wages rising, consumers should contribute more to the expansion the rest of this year.