The BEA announced that real GDP increased 3.2% in the advance estimate for 2019 Q1. Over the past few years Q1 had come in quite weak, not so this time. Inventory accumulation played a major role, increasing $31.6 billion leading to a massive $128.4 billion level. The high, and mostly unexpected, level of current inventory will lead many to cut their forecast of Q2 GDP growth.
Personal consumption expenditures were quite weak, increasing only 1.2%, with durable goods decreasing 5.3%. The year-over-year change in the PCE has been basically flat since 2016. Gross private domestic investment increased 5.1% with a large intellectual property products increase of 8.6%. Residential investment continues to decline, down 2.8% and down 7 of the last 8 quarters with the last positive reading back in Q4 of 2017.
Exports were up 3.7% and imports down 3.7%. Government expenditures for consumption and gross investment was up 2.4%.
Overall this was a strong report yet probably will not elicit any large changes in the Fed’s current policy stance.
