US GDP growth confirmed at 3.1 per cent in Q1

WASHINGTON — America's economy grew at a solid 3.1 per cent clip in the first three months of the year, government data showed on Thursday, confirming a previous estimate.

The pace of the gross domestic product (GDP) growth marked a significant uptick from the slowdown at the end of 2018, despite President Donald Trump's extended government shutdown. However, the economy is expected to slacken somewhat in the second quarter.

The unexpectedly strong quarter was a political boost to Trump, who has hailed America's economic vigour despite mounting signs that his aggressive trade policies are beginning to weigh on business activity and confidence.

Economists also say major factors which contributed to the strength of the January-March quarter — such as falling imports and inventory building — do not point to underlying momentum in the economy.

Forecasts for growth in the second quarter of this year currently point to expansion of around 2 per cent.

The United States next month is due to mark its longest economic recovery on record, ten years after the end of the Great Recession in 2009 — prompting nervous speculation among markets about how much longer it can last.

The data released on Thursday showed consumption in the first quarter had been even weaker than previously thought.

This was offset, however, by improvements in the trade balance as exports proved to be stronger than previously thought while imports were lower. The picture for business investment and the housing market also improved.

A bump in military spending also helped support overall growth.

The White House says it expects growth this year to hold steady at its 3 per cent target, well above forecasts from the International Monetary Fund and US Federal Reserve.

For the moment, the United States continues to emit mixed signals.

Surveys of consumer confidence and business activity are running hot, unemployment is still near 50-year lows, and consumer spending has been healthy in recent months. 

But elsewhere the news has not been so good. Recession indicators have begun to flash red and the manufacturing sector has weakened significantly.

Meanwhile, the brinkmanship in trade relations between Washington and Beijing has left markets on tenterhooks.

Much is riding on a meeting between Trump and Chinese President Xi Jinping scheduled for this weekend, with Trump having threatened to slap painful tariffs on $300 billion more in Chinese imports.