MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.
NICK EICHER, HOST: Another week of remarkably good news on the economy. I’ll start with GDP, Gross Domestic Product. That’s the broadest measure we have of economic output, and the government reports the number each quarter of the year.
On Friday, the Commerce Department reported that GDP in the first three months of 2019 grew at a 3.2 percent annual rate. We’ve not had a first-quarter growth rate this strong in four years.
Virtually no economists predicted this, not even at the White House. Economists The Wall Street Journal polled were estimating 2.5 percent growth.
Many pointed to international trade disputes, notably with China, and slow growth in Europe and Asia. That, as well as the government shutdown in December and January, were signals the economy would likely struggle early this year.
REICHARD: What drove the number up were two big unexpected factors: a rise in U.S. exports added a full percentage point to growth, and higher business inventories added seven-tenths. Some economists say those are temporary factors that could just as easily go the other way. They say the economy is headed for a slowdown, and they expect growth for the year to settle down into the 2-percent range.
Not the White House. If anything the solid GDP report bolsters the view of White House economic adviser Larry Kudlow. He predicts 3 percent for the year. In his words, “the prosperity cycle is intact.”
And this GDP report does one more thing: It gives U.S. negotiators the upper hand negotiating trade terms with China.
Here’s Kudlow on CNBC.
KUDLOW: Because of our strength and because, I think, China needs to open their economy to better growth outlook, we will be strong. This number helps that a lot. We will be very aggressive in these trade talks. Very aggressive.
EICHER: On Wall Street, three of the major stock indexes posted gains on the week. Only the Dow Jones Industrials lost ground, falling one-tenth of a percent. The Standard & Poor’s 500 stock index picked up 1.2 percent. The Nasdaq index, made up largely of high-tech company stocks, gained 1.9. And the smaller-company stock index, the Russell 2000, added 1.7 percent.
On the year, the Nasdaq is up almost 23 percent so far and the S&P 500 is up more than 17. Overall, those two indexes have exceeded the most recent high reached back in September of last year.
Remember, the markets nosedived from that point to the end of 2018. This year, they’ve more than erased all of those losses and set record new highs two times last week, Tuesday and Friday.
And that’s today’s Monday Moneybeat.