According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) increased at an annual rate of 3.2% in the first quarter of 2019, faster than the 2.2% increase in the fourth quarter of 2018 and above NAHB’s forecast. It is the 20th consecutive quarter of growth. Since the first quarter of 2017, economic growth has not been below a quarterly annualized rate of 2%.
The increase in real GDP in the first quarter of 2019 was caused by increases in personal consumption expenditures (PCE), which, alone, accounts for about 70 percent of the overall economy, gross private domestic investment, federal government spending and exports, and decreases in imports. In the first quarter of 2019, decreases in residential fixed investment (RFI) had negative contributions to economic growth, while investments in intellectual property products increased 8.6%. Housing affordability concerns have caused RFI to make negative contributions for five straight quarters.
The acceleration in economic growth in the first quarter of 2019 reflected gains in gross private domestic investment and exports, an upturn in government consumption and a downturn in imports, which are a subtraction in the calculation of GDP. Meanwhile, increases in personal consumption expenditures slowed down from 2.5% in the fourth quarter of 2018 to 1.2% in the first quarter of 2019. This might be a concern for the second quarter.