Highlights of the first look at Q1 2021 US GDP

US Q4 advance GDP
  • 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:

  • Ex motor vehicles +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
  • Home investment +10.8% vs +33.5% prior
  • Consumer spending on durables +41.4% vs -1.1% prior

Only a month ago, the Q1 consensus was -0.1% and for the year it was 5.7%. Those have moved up in a hurry.

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.

The market reaction has been modest.

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