After the Federal Reserve announced tepid expectations for the economy in 2019, the BEA reported strong 1st-quarter growth in real GDP. The gains should bolster confidence in the U.S. economy despite concerns over cooling inflation, soft housing data, and weak growth in personal consumption expenditures. The year began with the U.S. government in the midst of a 35-day partial shutdown, which cost the economy an estimated $11 billion by stalling federal purchases and weakening personal consumption during the shutdown period.
The labor market remained strong in the 1st quarter, and both capital markets and oil prices rebounded from the previous quarter. The resurgence in equity markets came as strength in multinational corporations calmed fears of global economic slowdown. Additionally, the Federal Reserve announced its intention to hold off on target interest rate hikes in 2019, a favorable condition for equity markets. Following the strong GDP performance in the first quarter, the Fed will likely upgrade its economic predictions for the year but is expected to remain steady on interest rates.