Womack Investment Advisers

  It wasn’t an ‘Avengers End Game’ spoiler, but there was big news last week. Economic growth in the United States was strong during the first quarter. The Bureau Of Economic Analysis (BEA) announced gross domestic product (GDP), which is the value of all goods and services produced in the United States, increased by 3.2 percent. The estimate came as a surprise. It was well above the consensus forecast of 2.3 percent, according to Randall Forsyth of Barron’s. In addition, as The Economist pointed out, “This year America’s economy did not get the freshest of starts. A government shutdown, a wobbly stock market and concerns that the Federal Reserve would tighten monetary policy too quickly made for a dim outlook for 2019. With the effects of fiscal stimulus fading, and momentum in the global economy ebbing, most expected America’s economic growth to decelerate.” Both Barron’s and The Economist cautioned investors to look under the hood, though. The top contri

After the release of last week’s impressive GDP headline of 3.2%, some analysts noted that a deeper look beyond the headline number revealed that not all the innards were was as rosy as the headline.   Harvard Professor Jason Furman noted that “The underlying trend of consumption and investment is weakening.”   In fact, private-sector consumption and investment slowed to just a 1.3% annual rate in the first quarter, the slowest in nearly six years.   Furthermore, consumer spending rose only 1.2% in the first quarter, after healthy 2.5% growth the previous quarter, and spending on durable goods plunged 5.3%, the worst since 2009.   Professor Furman notes that the 3.2% GDP reading was deceptively boosted by several one-off factors—improvement in the trade balance, a large build-up in inventories and higher spending by state and local governments.   The private-sector slowdown is illustrated by the following chart, from Haver Analytics.