The first quarter’s GDP figures came in well above most estimates and lessened fears of a pronounced economic slowdown. GDP was up 3.2% in the first three months of the year following an unrevised gain of 2.2% in the final quarter of 2018. This is especially good news given that the first quarter has been one of the weakest quarters for several of the past few years.

Strength continued into the current quarter as seen in the strong April jobs report, which showed a gain of 263,000 in nonfarm payrolls for the month. Wages also rose, with average hourly earnings up 3.2% year over year. And in perhaps the best news, the unemployment rate fell to 3.6%, a 49-year low.

Following its May 1 meeting, the Federal Reserve (the “Fed”) announced no change in its interest-rate policy. The Fed is sticking to its mantra of being “patient” in watching the economy perform without having a bias toward either higher or lower rates at the moment. With that being said, Chair Jerome Powell acknowledged that inflation has been running below the Fed’s 2% target, but the Federal Open Market Committee believes this is mostly due to transitory factors. If below-target inflation persists, pressure will build on the Fed to take steps to become more accommodative.

With the Fed seemingly on the sidelines for the foreseeable future, the markets have turned their focus to the ongoing trade frictions between the major developed countries. While outright trade wars have not developed, it is likely that individual tariffs and overall uncertainty will continue to weigh on global growth. Political pressures add to the concerns going forward. Brexit, the stability of the remaining European Union members, and what may be a brutal presidential election in 2020 are all issues that could trigger unwelcome economic tremors.

Early concerns about personal incometax collections seem to have subsided as receipts during the final days of the tax-collection season appear to have met or exceeded expectations, particularly in California, where April collections surpassed estimates.