NEW: U.S. economy grew at strong 3.2% rate in first quarter.
The U.S. economy grew at a solid 3.2% annual rate in the first three months of the year, a far better outcome than expected, overcoming a host of headwinds including global weakness, rising trade tensions and a partial government shutdown.
It was the strongest first quarter growth rate since 2015. In recent years, GDP has been exceptionally weak in the first quarter. There had been fears growth could dip below 1% this year due to a variety of adverse factors such as the December stock market nosedive, rising weakness in key economies overseas, the U.S. trade war with China and a 35-day partial government shutdown that ended in January.
In the first quarter, inventory rebuilding added 0.7 percentage point to growth, while a falling trade deficit boosted growth by a full percentage point. Analysts think both of those factors will reverse in the current quarter. For the year, economists believe GDP will expand 2.4%, down from last year's 2.9% gain, as the boost from the 2017 tax cuts and increased government spending over the past two years start to fade.
Mark Zandi, chief economist at Moody's Analytics, said he expects growth for this year to be around 2.2%, close to the average for the past 10 years.
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