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US Economy Continues to Expand Fast, But the USD Is Not Responding to It
The expansion of the US economy continues and it is picking further speed. Today’s GDP report showed a decent increase, despite missing expectations, while the unemployment claims remained in the 550K region.
The US economy is expanding faster than any major economy across the world, which should have turned the USD quite bullish. But, the FED is trying to keep it down as long a possible, playing the economic data down.
US Q1 2021 GDP Report
- Q4 advance GDP +6.4% vs +6.6% expected
- Q4 was +4.3% annualized
- Personal consumption +10.7% vs +10.5% expected
- GDP price index +4.1% vs +2.6% expected
- Core PCE +2.3% vs +2.4% expected
Details:
- Core sales, excluding auto +6.6% vs +4.9% in Q4
- Final sales +9.2% vs +3.0% prior
- Inventories cut 2.64 pp from GDP
- Inventories added 1.37 pp to GDP in Q4
- Business investment +9.9% vs +13.8% prior
- Business investment in equipment +16.7% vs +24.9% prior
- Exports -1.1% vs +22.0% prior
- Imports +5.7% vs +29.5% prior
- Trade was a 0.87 pp drag on GDP
- Home investment +10.8% vs +33.5% prior
- Consumer spending on durables +41.4% vs -1.1% prior
- Full report
Only a month ago, the consensus for the Q1 GDP was -0.1% and for the year it was 5.7%. Those have moved up pretty quickly. Looking through these numbers, the underlying picture is even stronger than the headline.
Trade and inventories were a big drag in the quarter but consumer spending and investment bode well going forward. A huge jump in new truck sales skewed durable consumer spending higher but even as that fades, spending elsewhere will pick up the torch.
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