By Thomas Cooley and Peter Rupert
The BEA announced the advance estimate for Q1 GDP showing an increase of 6.39%. The increase was largely fueled by a massive increase in in consumption. Personal consumption expenditures were up 10.7%, with the purchases of goods up 23.6% coming from durable goods up 41.4%. Durables consumption was mostly fueled by the demand for motor vehicles. Government spending increased a solid 6.3% due to increase spending on vaccine distribution. Business investment was strongly positive wit much of it allocation to software and technology little on structures.
Going back a little farther in time it is obvious there was a recession in 2008-2009, less so in 2001. The huge gyrations coming from the pandemic make it very difficult to interpret the state of the economy.
Initial and continuing claims
Initial claims fell once again, however the data show the claims to be quite stubborn, remaining substantially higher than historical numbers, the last reading was 553,000. For example, initial claims in 2019 averaged about 210,000. Continuing claims (insured unemployment) have also been stubbornly high.
The prospect is for growth throughout 2021 in the U.S. The prospects for Europe and elsewhere are an open question.
