1. First Quarter GDP Growth Slowed to 2.2% Annual Rate
2. Can the US Economy Really Grow at 3% or Better This Year?
3. US Regains #1 Spot in Global Competitiveness Ranking
4. How Candidate & President Trump’s Critics Got It So Wrong

Overview

A surprising new report from a respected independent research group in Switzerland concluded that the United States has regained its position as the #1 nation in its global competitiveness ranking. This accomplishment was not expected and has not been widely reported in the mainstream media – no surprise there.

The US jumped three spots to take over the top spot in global competitiveness – now ahead of Hong Kong, Singapore, the Netherlands and Switzerland – the previous leaders in recent years. The jump was based on the US "strength in economic performance and infrastructure," ranking first in both areas.

Before we get to that exciting discussion, let’s take a brief look at last week’s mildly disappointing second estimate of 1Q Gross Domestic Product, which came in at 2.2% versus the initial estimate of 2.3%. The decrease was largely due to weaker than expected consumer spending.

Fortunately, consumer spending has improved in the current quarter, and more and more economists now believe we will see GDP growth of 3% or better for all of 2018. I’ll tell you why below. It should make for an interesting E-Letter.

First Quarter GDP Growth Slowed to 2.2% Annual Rate

US economic growth slowed slightly more than initially thought in the 1Q as consumer spending rose at its weakest pace in nearly five years. Gross Domestic Product increased at a 2.2% annual rate, the Commerce Department reported last Wednesday in its second estimate of 1Q GDP; that was down from the previously reported 2.3%. The economy grew at a 2.9% rate in the 4Q.

Real GDP

Consumer spending, which accounts for more than two-thirds of total US economic output, rose only at a 1% annual pace in the 1Q, the weakest quarter for consumer spending in nearly five years. Most economists expect consumer spending to strengthen the rest of this year – in fact it already has.