Overall M&A Market Commentary
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The current U.S. economic expansion continues its run into record length territory in early 2019. After final downward adjustments to 4Q18 GDP, 4Q18 to 4Q17 GDP growth clocked in at 3.1% with total year to year GDP growth at 2.9%. Only a few years ago many economists thought growth rates this robust were no longer possible. In a news conference in late March 2019, Fed Chairman Jerome Powell remarked that the economy “is in a good place” and that “economic fundamentals are still very strong.” However, Powell also remarked that the 2019 economy was slowing more than expected due to weakness in consumer spending and business investment. As a result, the Fed reduced its estimate of 2019 GDP growth to 2.1% from the Fed’s previous December 2018 forecast of 2.3%. The slowdown in the European and Chinese economies are affecting the U.S. economy and making it difficult to achieve 3% plus GDP growth in 2019. While the Fed has become more conservative in their assessment of the economy, others have more optimism. “The first-quarter was artificially weak and difficult to estimate because of things like the government shutdown, the polar vortex and last year’s boost from tax cuts,” said Ralf Preusser, rates strategist at Bank of America. “But the labor market is solid and fiscal policy remains supportive. I think there is quite a high chance of a positive GDP surprise, Q2 and Q3 should be above trend.”
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