The US economy grew at a much better than expected rate in the first quarter, the Commerce Department reported Friday (April 26). The top-line number is a pleasant surprise in a quarter marked by a government shutdown, severe weather, Boeing’s troubles with the 737 Max, fears of an escalating trade war and the gradual fading of fiscal stimulus from tax cuts.
But digging into the details of the report reveals that weakness remains in the American economy, according to a CNN report.
The Bureau of Economic Analysis reported that gross domestic product grew at an annual rate of 3.2%, substantially above the projected 2.1%, buoyed by stronger state and local government spending, lower imports and business inventories.
Growth was driven in part by higher inventories, especially in the manufacturing industry, which can indicate that businesses are stockpiling goods rather than selling them. Domestic private sales, which subtract out imports and exports as well as government spending, decelerated to half the rate of the previous quarter — the smallest gain in three years.
Meanwhile, consumer spending slowed, in part due to weak sales of goods, in particular light trucks. Business investment also slowed from the previous quarter, with agricultural machinery and office furniture posting the largest declines. The biggest boost for business investment came from intellectual property products.
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