President Donald Trump defied the assessments of mainstream economists again as the U.S. economy accelerated in the first quarter of 2019 despites a bitter trade tension with China.
Real gross domestic product increased 3.1 percent on-year in January-March, according to the second estimate of first-quarter GDP released by the U.S. Bureau of Economic Analysis (BEA) on May 30.
The growth rate in the first quarter of this year leaped from the fourth quarter of 2018 when real GDP rose 2.2 percent, the bureau said.
The speed also beat Wall Street projections of 3 percent, according to CNBC, which said the growth easily surpassed what most economists had been expecting at the start of the year.
BEA, an agency under the Department of Commerce, said the acceleration of real GDP growth reflected the increases in consumer spending, inventory investment, exports, state and local government spending, and business investment.
Exports rose 4.8 percent though the trade war between the U.S. and China got worse after the Trump administration hiked tariffs on $200 billion worth of Chinese imports, accusing Beijing of unfair trade practices.
Imports, which are a subtraction in the calculation of GDP, decreased 2.5 percent. As a result, net exports added nearly 1 percentage point to the GDP gain, becoming a big contributor.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was up 1.3 percent in the first quarter, compared with a rise of 2.5 percent in the previous quarter.
Corporate profits decreased 2.8 percent at a quarterly rate in the first quarter of 2019 after decreasing 0.4 percent in the fourth quarter of 2018. Over the last 4 quarters, earnings of U.S. companies, however, still increased 3.1 percent.
Data shows that real gross domestic income (GDI) increased 1.4 percent in the first quarter, compared with an increase of 0.5 percent (revised) in the fourth quarter of 2018.
Inflation indicators were reported weaker than expected, with core personal consumption expenditures edged up just 1.03 percent.
The Trump administration has defied the doubters with the economy surging beyond expectations. They insist that its sweeping tax cuts, deregulatory push, and tougher enforcement of trade deals will generate annual GDP growth above 3 percent for the next six years.