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The US economy continues to outperform the rest of the advanced world, point out analysts at National Bank of Canada. They raised 2019 US GDP growth forecast by two ticks to 2.5%.  

Key Quotes:

“The U.S. economy started 2019 like a lion according to the Bureau of Economic Analysis whose 3.2% estimate for Q1 GDP growth was well above consensus expectations. The upside surprise came from government spending (mostly state/local) which is always difficult to predict by forecasters because of scant data, but also from inventory accumulation which was significant. Trade was also a major contributor, although that was because of a decline in imports.  But not all was rosy in the GDP report. Despite the upside surprise ongovernment spending, final domestic demand (i.e. GDP excluding trade and inventories) grew just 1.5% annualized, the weakest since 2015. So much so that the growth gap between real GDP and final domestic demand in Q1 was the largest in six years.”

“While Q2 GDP growth will soften to more sustainable levels, we’re still expecting growth of around 2% in that quarter. That would extend the expansion to 40 quarters, or within one quarter of the 1991-2001 expansion which was the longest in U.S. history. All told, the stronger-than-expected start to the year forces us to raise our 2019 U.S. GDP growth forecast by two ticks to 2.5%.”