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Economic Parameters Favorable for First Quarter of 2019


The Department of Commerce announced that GDP growth during the first quarter of 2019 attained 3.1 percent compared to the last quarter of 2018 which posted a 2.2 percent increase.

The Personal-Consumption Expenditures Price Index rose 1.35 percent during the first quarter compared to the corresponding period in 2018. This was close to a projected 1.4. percent gain. The BCE price index excluding food and energy was revised downward to 1.62 percent. Obviously inflation at this time is low and below the two-percent target adopted by the Federal Reserve.

Acceptable growth figures for the first quarter are inconsistent with concern over trade conflicts reflected in a six-week decline in stock market averages and lower profits posted by companies. The effects of the 2017 tax concessions are no longer apparent with a 1.7 percent decline in company profit in the fourth quarter of 2018 compared to the previous quarter.

Investment in fixed assets and also software, R&D and equipment rose during the first quarter at an annualized 2.3 percent rate, lower than a 2.7 percent estimate.

Businesses will be faced with uncertainty through the remainder of 2019. The economic outlook is clouded by trade wars, a global downturn, possible disruptions in North American supply chains and reduced consumer spending as tariffs are passed on at the retail level.