Bond Markets React to Strong US Growth

US economic activity has been much stronger than most expected, while inflation measures have remained muted

Dave Sekera, CFA 30 April, 2019 | 10:08AM

US dollars

During the first quarter, the US economy expanded at a much higher rate than anyone originally expected. GDP rose at a 3.2% annual rate in the first quarter compared with the consensus expectation of 2.3%. This was the strongest reading for the first quarter in the past four years and was a significant acceleration from the fourth quarter of 2018, when GDP increased at a 2.2% annual rate.

Economic activity was bolstered by increases in net exports, inventory, and government spending. Not only was economic activity in the first quarter stronger than expected, but momentum accelerated toward the end of the quarter. For example, durable goods orders rose 2.7% in March compared with February, retail sales increased 1.6% in March, and unemployment has remained exceptionally low.

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About Author

Dave Sekera, CFA  is a senior securities analyst with Morningstar.

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