There was so much important data released last week, it’s hard to know where to begin. Let’s start with the big one: GDP.
The amount of growth in the gross domestic product during the first three months of the year was highly anticipated, and it is little surprise that a quarter of vaccinations and reopenings made for a strong figure. The 6.4% annualized growth reversed the slowing trend experienced in the fourth quarter, when the economy only expanded by an annualized 4.3%. And this included a 2.6% drag from shrinking inventories, a temporary resistance likely to reverse sharply in the second quarter.
The strength, as you can see below, was in the consumer sector. Durable goods consumption continues to skyrocket, as has residential investment, both encouraged by strong income growth and low financing rates. But more encouraging was the rebound in household services spending, now down “only” a few percentage points compared to a year ago. While the reopening pace appears to have slowed somewhat in recent weeks, further improvement in the second quarter is still extremely likely.