White House economic adviser Kevin Hassett said the “blockbuster” 3.2 percent economic growth in the first quarter is “absolutely” sustainable.
The Trump administration has already been forecasting 3.2% economic growth for 2019.
“Maybe we would revise it up,” he told CNBC.
“The [first-quarter] number was three-tenths lower because of the government shutdown and … the first quarter tends to be low because the winter weather isn’t really accounted for right in the statistics,” said Hassett, chairman of the Council of Economic Advisers.
“You add that all together, this is really blockbuster news and suggests that the risks on the upside are very high for GDP this year,” he added.
He spoke hours after the government said U.S. economic growth accelerated in the first quarter, but the burst in growth was driven by a smaller trade deficit and the largest accumulation of unsold merchandise since 2015, temporary boosters that are seen weighing on the economy later this year, Reuters reported.
The surge in growth reported by the Commerce Department on Friday put to rest fears of a recession, that were stoked by a brief inversion of the U.S. Treasury yield curve in March. But it also exaggerates the health of the economy as consumer and business spending slowed sharply, and investment in homebuilding contracted for a fifth straight quarter.
Gross domestic product increased at a 3.2 percent annualized rate in the first quarter, the government said in its advance GDP report. Growth was also driven by increased investment in roads by local and state governments.
“The gain in first-quarter GDP would seem to make a mockery of claims that the U.S. economy is slowing as the fiscal stimulus fades,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto. “Looking beyond the headline number, however, there are plenty of causes for concern.”
The economy grew at a 2.2 percent pace in the October-December period. Economists polled by Reuters had forecast GDP increasing at a 2.0 percent rate in the first three months of the year. The economy will mark 10 years of expansion in July, the longest on record.
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