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GDP (Q1)

Buoyed by the two rounds of stimulus cheques sent out in the first three months of the year, first-quarter GDP growth accelerated to 6.4% annualised, driven by a massive 10.7% surge in consumption. That left the level of GDP less than 1% off its pre-pandemic peak. It will recapture that level in the second quarter and, with the pace of growth we expect, any remaining output gap should be eliminated before the end of this year.
Paul Ashworth Chief North America Economist
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US Economics Weekly

Spender of last resort

With China’s economy hampered by its zero-covid lockdowns, and Europe’s economy suffering because of the massive surge in imported energy prices caused by the war in Ukraine, the American consumer has once-again emerged as the world’s spender of last resort.

20 May 2022

US Chart Book

Economy powering ahead

The strength of the hard activity data for April refutes the recent message from financial markets that the economy is at risk of imminent recession. The solid gain in control group retail sales, together with upward revisions to past months leaves the underlying trend in consumer spending looking much stronger. Meanwhile the continued rebound in manufacturing output, in particular the recovery in vehicle output to the pre-pandemic level, illustrates how the gradual easing of supply shortages is supporting a rebound in production. With signs that core inflation is still running far too hot, the continued strength of economic activity supports the Fed’s decision to press ahead with 50bp rate hikes at the next couple of FOMC meetings. Nevertheless, we still expect a drop back in inflation later this year, alongside signs of a slowdown in economic activity will prompt the FOMC to shift back to 25bp hikes by the fall.

18 May 2022

US Data Response

Industrial Production (Apr.)

The 0.8% rise in manufacturing output last month underlines that it is not just consumer spending powering the economy forward. While the survey evidence suggests global manufacturing demand is cooling, the gradual easing of input shortages over recent months is helping to keep output growth strong.

17 May 2022

More from Paul Ashworth

US Economics Update

Inflation “transitory”, but Fed now projects rate hikes

The Fed continued to stick to its view that the surge in inflation "largely" reflects "transitory factors", but officials revised their inflation projections up significantly for this year and the median projection now shows two 25bp interest rate hikes in 2023. In his press conference, Chair Jerome Powell argued that the Fed was still “a ways off” from achieving the substantial further progress toward its dual mandate goals that would trigger a tapering of its monthly asset purchases.

16 June 2021

US Economics Update

Fed remains dovish despite strength of recovery

Although it took a more upbeat tone on the economic outlook and acknowledged that inflation has risen in its statement released after today’s FOMC meeting, the Fed offered no hints that it was considering slowing the pace of its asset purchases, let alone thinking about raising interest rates.

28 April 2021

US Data Response

Employment Report (Mar.)

The better than expected 916,000 rebound in non-farm payrolls in March still leaves employment 8.4 million below its pre-pandemic peak from just over a year ago but, with the vaccination program likely to reach critical mass within the next couple of months and the next round of fiscal stimulus providing a big boost, there is finally real light at the end of the tunnel.

2 April 2021
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