Tuesday , May 11 2021
Home / The Capital Spectator / US Q1 GDP Estimate Revised Up After Upbeat Economic Reports

US Q1 GDP Estimate Revised Up After Upbeat Economic Reports

Summary:
The US economic outlook continues to improve for the upcoming first-quarter estimate of gross domestic product (GDP), based on a set of nowcasts. Compared with Q4’s solid increase, Q1 output is on track to show a substantially stronger gain in the scheduled Apr. 29 release from the Bureau of Economic Analysis. Economic activity in the first three months of 2021 is on track to expand by 6.5% (real annual rate), based on the median nowcast for several estimates compiled by CapitalSpectator.com. That’s up from the 6.0% estimate on Apr. 7. Note, too, that today’s revised Q1 estimate reflects a substantially faster pace vs. the 4.3% increase reported for last year’s Q4. Supporting the upward nowcast revision: several upbeat releases of key economic indicators in recent days. Let’s

Topics:
James Picerno considers the following as important: ,

This could be interesting, too:

James Picerno writes All Major Asset Classes Rose Last Week, Except REITs

James Picerno writes Macro Briefing: 10 May 2021

James Picerno writes The ETF Portfolio Strategist: 9 May 2021

James Picerno writes Book Bits: 8 May 2021

The US economic outlook continues to improve for the upcoming first-quarter estimate of gross domestic product (GDP), based on a set of nowcasts. Compared with Q4’s solid increase, Q1 output is on track to show a substantially stronger gain in the scheduled Apr. 29 release from the Bureau of Economic Analysis.

Economic activity in the first three months of 2021 is on track to expand by 6.5% (real annual rate), based on the median nowcast for several estimates compiled by CapitalSpectator.com. That’s up from the 6.0% estimate on Apr. 7. Note, too, that today’s revised Q1 estimate reflects a substantially faster pace vs. the 4.3% increase reported for last year’s Q4.

US Q1 GDP Estimate Revised Up After Upbeat Economic Reports

Supporting the upward nowcast revision: several upbeat releases of key economic indicators in recent days. Let’s start with retail sales, which surged 9.8% in March, driven by stimulus checks.

“Spending will almost certainly drop back in April as some of the stimulus boost wears off, but with the vaccination rollout proceeding at a rapid pace and households finances in strong shape, we expect overall consumption growth to continue rebounding rapidly in the second quarter too,” advises Michael Pearce, senior US economist at Capital Economics, in a research note.


How is recession risk evolving? Monitor the outlook with a subscription to:
The US Business Cycle Risk Report


Another encouraging release: jobless claims fell to a new pandemic low last week, which suggests that the labor market’s recovery is on a sustainable path and possibly gaining speed.

US Q1 GDP Estimate Revised Up After Upbeat Economic Reports

“We’re gaining momentum here, which is just unquestionable,” says Diane Swonk, chief economist at the accounting firm Grant Thornton.

The 576,000 increase of new filings for unemployment benefits is still high relative to history, but the drop is an encouraging sign that the pandemic’s blowback is fading in terms of job loss.

“You’re still not popping champagne corks,” Swonk adds. “I will breathe again — and breathe easy again — once we get these [jobless claims] numbers back down in the 200,000 range.”

Note, too, that industrial production rebounded in March after a sharp decline in February, reportedly due to unusually cold weather. The manufacturing component led the recovery and more of the same is expected for the start to Q2, based on April survey data from two regional Fed banks (Philly Fed and New York Fed). In both cases, expectations for this month’s data point to ongoing strength.

Accelerating vaccinations and reopening businesses are adding to the optimism. But some economists worry that it’s all a macro sugar rush that will fade.

“I don’t see growth as being particularly durable,” warns Joseph LaVorgna, chief economist for the Americas at Natixis. “The economy is going to slow a lot more next year than people think and probably will be well under 3%.”

Perhaps, but expectations for a near-term acceleration are sucking up all the attention at the moment.

“We think the momentum continues into the second quarter,” predicts Brett Ryan, senior US economist at Deutsche Bank Securities. “It shows that the economy has significant momentum going into the summer.”


Learn To Use R For Portfolio Analysis
Quantitative Investment Portfolio Analytics In R:
An Introduction To R For Modeling Portfolio Risk and Return

By James Picerno


James Picerno
James Picerno is a financial journalist who has been writing about finance and investment theory for more than twenty years. He writes for trade magazines read by financial professionals and financial advisers. Over the years, he’s written for the Wall Street Journal, Barron’s, Bloomberg Markets, Mutual Funds, Modern Maturity, Investment Advisor, Reuters, and his popular finance blog, The CapitalSpectator.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.