On The Money: Trump seeks longer boost from economy | First quarter growth blows past expectations | Fed pick Moore says GOP shouldn't 'walk the plank' for him | Warren says Biden sided with credit card giants over families
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THE BIG DEAL–US economy grew at 3.2 percent in first quarter, exceeding expectations: Economic growth in the U.S. blew past expectations in the first quarter of 2019, easing fears of an impending slowdown that kicked off the year.
U.S. gross domestic product (GDP) grew at an annual rate of 3.2 percent in the first quarter of 2019, according to an initial estimate of growth released Friday by the Commerce Department.
Economists had expected U.S. GDP to grow roughly 2.5 percent between the first quarters of 2018 and 2019, typically one of the weaker periods for the American economy. Shaky financial markets, lagging retail sales and weak job gains all improved over the course of the first four months of 2019, improving the overall economic outlook along the way.
Increases in private inventory investment, nonresidential fixed investment, exports and nonfederal government spending helped drive strong first quarter growth, the Commerce Department said. I break down the numbers here.
- The surprisingly high first quarter growth rate is the latest sign of strength for the U.S. economy well into its 10th year of expansion since the Great Recession.
- The economy grew at a solid 2.9 percent rate in 2018 but slowing growth and severe financial market turmoil to end the year raised concerns of an impending slowdown.
- Despite a sluggish start to 2019, the U.S. economy has added an average 180,000 jobs per month this year while the stock market has reached record highs.
Trump is looking for a longer boost from the economy, and the strong GDP put the president in a boastful mood as he touted the numbers during a speech at the National Rifle Association convention in Indianapolis.
He told the audience the GDP numbers “smashed expectations.”
“Our nation is greater today than it has ever been — stronger, richer,” Trump added. “We’re doing better than ever before.”
The president’s reelection effort is closely connected to the economy, as he hopes to ride a story about economic success to another four years in office. I explain why here.
The red flags: Several economists said Friday that while the top line GDP number looked strong, some of the underlying data highlighted potential weaknesses in the economy.
- Personal consumption spending rose just 1.2 percent in the first quarter, compared to increases of 2.5 percent in the fourth quarter of 2018, 3.5 percent in the third quarter and 3.8 percent in the second quarter.
- Private nonresidential investment slowed to a 2.7 percent increase in the first quarter despite Republican efforts to boost business expansion through the 2017 tax cuts.
- Final sales to private domestic purchasers, which excludes sectors such as government spending, inventory building and exports, rose just 1.3 percent in the first quarter.
Diane Swonk, who is chief economist at Grant Thornton, said that more than half of first quarter GDP growth came from volatile trade-related metrics while the “underlying momentum in the domestic economy was particularly weak.”
“This is one of the weakest 3% growth quarters I have ever seen,” Swonk wrote in a research note. “Our forecast holds for a slowdown in 2019.”
LEADING THE DAY
Moore says GOP shouldn’t “walk the plank” for him
Stephen Moore said Friday that he would step aside from his possible nomination to the Federal Reserve if his controversial commentary on women would hurt the Republican Party.
Moore, in a Friday interview with Fox News’s Neil Cavuto, said he would be easily confirmed to the Fed board if the consideration was based just on his views on economic policy.
“If this a debate about my economic credentials and economic record, I’m going to win 55 to 60 votes,” Moore said on “Your World with Neil Cavuto,” calling himself a victim of “character assassination.”
But Moore also said he was willing to step down if necessary to protect GOP senators who might otherwise have a tough vote, a point he previously made this week in an interview with The Wall Street Journal.
“This should not be a tough vote,” Moore said. “It’s not worth Republicans losing two or three seats to walk the plank for me.
“If I do become a liability to the Republicans, I would withdraw from the race,” he added.
Warren takes shot at Biden: He was ‘on the side of credit card companies’ Sen. Elizabeth WarrenElizabeth Ann WarrenPresenting the 2020 Democratic bracket The Memo: Trump’s media dominance challenged by 2020 Dems Biden to face pressure on Medicare for All MORE (D-Mass.) took a shot at fellow 2020 presidential candidate Joe BidenJoseph (Joe) Robinette BidenTrump defends Charlottesville comments Trump: ‘I am a young, vibrant man’ The Hill’s Morning Report — Biden takes aim at Trump, early battlegrounds MORE, saying the former vice president sided with the credit card companies over “hardworking families.”
“At a time when the biggest financial institutions in this country were trying to put the squeeze on millions of hardworking families,” Warren said Thursday, “Joe Biden was on the side of the credit card companies.”
The background: In 2005, Biden voted for the Bankruptcy Abuse Prevention and Consumer Protection Act. Critics have said the law enabled credit card companies to target people seeking bankruptcy protection. Warren fought against the passage of that bill long before she emerged as a political powerhouse.
Uber aims for valuation of more than $80 billion in IPO: Uber says it could be worth between $80-$90 billion when it goes public on the New York Stock Exchange next month, according to a Friday regulatory filing.
That would make Uber’s initial public offering (IPO) one of the largest ever in the technology industry, as well as the largest IPO this year.
The ride-hailing company says it hopes to raise up to $10 billion in its IPO and plans to sell its shares for between $44 and $50 when it goes public. It had previously said it was aiming for a higher valuation, but it is likely seeking to avoid the mistakes of its smaller rival, Lyft, which has seen its shares drop by more than 20 percent since Lyft’s IPO last month.
ON TAP NEXT WEEK
- The House Financial Services Committee holds a hearing entitled “Housing in America: Assessing the Infrastructure Needs of America’s Housing Stock,” 10 a.m.
- The House Oversight and Government Reform Committee holds a hearing on the financial condition of the U.S. Postal Service, 10 a.m.
- The Senate Banking Committee holds a hearing entitled “Guidance, Supervisory Expectations, and the Rule of Law: How do the Banking Agencies Regulate and Supervise Institutions?” 10 a.m.
- A House Financial Services subcommittee holds a hearing entitled “Ending Debt Traps in the Payday and Small Dollar Credit Industry,” 2 p.m.
- A House Financial Services subcommittee holds a hearing entitled “Examining Discrimination in the Automobile Loan and Insurance Industries,” 10 a.m.
- A House Financial Services subcommittee holds a hearing entitled “Good for the Bottom Line: A Review of the Business Case for Diversity and Inclusion,” 2 p.m.
- The House Natural Resource Committee holds a hearing entitled “The Status of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA): Lessons Learned Three Years Later,” 10 a.m.
GOOD TO KNOW
- Multiple airlines are blaming Boeing’s line of 737 Max jets, which were grounded worldwide earlier this year after the second of two deadly crashes within six months, for revenue shortfalls that have left some companies struggling to recover.
ODDS AND ENDS
- Activists and farmers’ organizations in India vowed to defend several farmers accused in court of growing a trademarked variety of potatoes without the consent of PepsiCo., the trademark’s owner.
RECAP THE WEEK WITH ON THE MONEY
- Monday: Cain withdraws from Fed consideration | Says he didn’t want ‘pay cut’ | Trump sues to block subpoena for financial records | Dems plot next move in Trump tax-return battle
- Tuesday: Treasury misses second Dem deadline on Trump tax returns | Waters renews calls for impeachment | Dem wants Fed pick to apologize for calling Ohio cities ‘armpits of America’ | Stocks reach record high after long recovery
- Wednesday: Fed pick Moore says he will drop out if he becomes a ‘political problem’ | Trump vows to fight ‘all the subpoenas’ | Deutsche Bank reportedly turning Trump records over to NY officials | Average tax refund down 2 percent
- Thursday: House to vote on bipartisan retirement bill in May | Mexico now biggest US trading partner | Mulvaney defends record on cutting spending