The US economy recorded an increase of 2.3% annualized rate in its GDP for the January-March quarter, its best for the same period since 2015. However, it still fell short by 3% and plus that was recorded for earlier quarters. But economists predict that the month of May can be a game-changer for the country as employee compensation costs marched forward and strong business investment took care of the shortcomings.
Trade and inventories recorded a plus in the calculations of the GDP. Price gains rose as was evident from the 2.5% annualized rate increase in the GDP price index. Employment cost index increased by 0.8% from earlier quarter. Consumer spending increased by 1.1% though investment in residential property and business equipment decreased. The GDP ex-inventories increased by 1.6% after taking care of inflation as compared to the earlier quarter’s 3.4%. However, greater slowdown was avoided due to hike in intellectual and non-residential property investment which was a strong 6.1% annualized rate. The new tax cuts made more disposable income available to the consumer but the consumer spending was still on a lower side.
Having said this, the GDP figures for the first quarter have always been disappointing for the country in recent times and according to economists one of the major reasons could be residual seasonality. The Bureau of Economic Analysis which forms a part of the Commerce Department is overhauling its policy methods to tackle this concern.
Different comments have been evoked from the GDP results from varied companies like Boeing and United Parcel Service who forebode a positive outlook for the country. While Caterpillar, the maker of construction equipment stated that their first quarter per share profit after providing for adjustments was the year’s high water mark.
It is the second quarter figures that will make the picture clearer for the country, for sure!