Analysts Warn the Economy May Not Be As Good as it Looks

A government report indicates that the United States economy grew at an impressive 3.2 percent annualized rate for the first quarter of 2019.  This is very good news at a time when many had expected growth to be minimal, if at all. Solid growth combined with an energized job market and new all-time highs across the stock market is helping to contribute some confidence that the current economy could boom to 1990’s levels. 

Indeed, many economists had predicted paltry growth at the top of the year which, if you recall, was in the middle of a partial US government shutdown.  A shaken market and a surprising cold—and snow—snap across the US caused businesses and consumers alike put their spending on hold.  However, at the same time, forecasters started to lift their estimates on the heels of a few one-time factors that could counterbalance the losses; at least, temporarily.

It is very important to examine that if any growth did occur in the first quarter, it was probably driven by an unusually low trade deficit inverse of a surging of inventories. After all, companies had to restore their supplies after quickly depleting them throughout last year. 

And more Americans seem to be feeling the heat from these gains, too.  As much as 53 percent of US consumers say they have personally experienced more financial stability or, at least, some financial improvements within the past month. Actually, this is the highest average since 1999. 

But while the trend might seem like we are mirroring a strong time in our economic history, this time around is quite different. The economy may be churning but inequality is higher than ever and we have a lot of government restriction, a variable that will be more dramatic if we hit a downturn. 

All that in mind, economists are now split—almost evenly—on the future direction of the economy.  The coming months are crucial for the economy—the rest of this year and into the next one—as the health of the economy will greatly play into how Americans feel this president has performed, heading into election season. 

Leave a Reply

Your email address will not be published. Required fields are marked *