GDP growth smashed expectations for Q1 2019. However, upon closer investigation, it seems that the economy’s pockets of weakness are growing. Is there a new sector that could save us from this downward spiral?
Depending on who you ask, an economic recession may be looming.
For supporters of President Trump’s economy, the numbers on paper look strong. After all, Q1 2019 exceeded expectations in GDP growth to the surprise of many. However, a deeper reading indicates that there should be limits to our optimism. The reality is that pockets of weakness in the U.S. economy are growing.
The most worrying metric is concerning private sector activity. According to economists, its numbers were surprisingly weak in Q1. That’s a bad sign.
Is US Economic Strength Exaggerated?
According to Eric Winograd, a senior U.S. economist at AllianceBernstein, all the headlines celebrating the strength of the economy are “exaggerated.”
According to Winograd, much of the GDP growth for the first quarter of 2019 was led by unsustainable inventory accumulation. Companies have been rushing orders due to an expected escalation with the trade war between Beijing and Washington.
On top of all this, private sector activity is at local lows. For example, final sales to private domestic purchases fell to a six-year low. That’s a decline of three straight quarters. Historically, private sector activity is the backbone of any economic forecast. By any estimate, the recent economic numbers point to weak fundamentals.
US Economy Needs a Blockchain Jump Start
Think back to the 1990s — a period of unprecedented growth pushed by excitement over a new sector of the economy: the Internet. Looking at today, it is clear that we need more innovation. We need a new economic sector to breathe life into the faltering U.S. economy.
The blockchain space has all the right ingredients to make this push happen. Not only does it build on the existing internet infrastructure — a sector which has tallied the most massive gains this quarter — but it’s a new industry, entirely.
As the complexity of digital infrastructure continues to expand, trustless automated systems will only grow in importance. Blockchain technology provides the tech industry with a cash cow — which would fundamentally alter how networks are organized and oriented towards one another. The end result may be the boom the U.S. economy desperately needs.
If the U.S. does not create a favorable environment for the blockchain sector, it may end up falling behind entirely — and bringing the entire economy down with it.If the U.S. does not create a favorable environment for the blockchain sector, it may end up falling behind entirely — and bringing the entire economy down with it. Click To Tweet
Do you agree that the fundamentals for the U.S. economy are weak? Can the blockchain sector innovation give markets a new life? Let us know your thoughts in the comments below.
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