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Economy in Brief

U.S. GDP Growth is Unrevised in Q1'21; Corporate Profit Estimate Strengthened
by Tom Moeller  June 24, 2021

• Consumer spending, business & residential investment are strengthened.

• Foreign trade subtraction is increased.

• Corporate profit improvement is raised.

Real GDP surged 6.4% (SAAR) during Q1'21 (0.4% y/y), unrevised from last month's estimate, following a 4.3% rise during the Q4'20. The gain matched expectations in the Action Economics Forecast Survey.

Corporate profits after tax w/o IVA & CCA adjustments increased 7.0% last quarter (28.1% y/y), revised from 4.6%. That followed a 1.7% decline in Q4'20. Before tax profits with IVA & CCA rose 2.4% (15.5% y/y), revised from no change. Nonfinancial sector earnings improved 5.3% (27.8% y/y), revised from 0.9%, while foreign sector profits fell a little-changed 2.4% (-10.5% y/y).

International trade deficit deterioration reduced GDP growth by an increased 1.5 percentage points, revised from 1.2 points. Exports fell a lessened 2.1% (-9.2% y/y) while imports rose a strengthened 9.5% (6.0% y/y) following two quarters of even stronger gain.

Domestic final sales growth was revised up to 10.5% (2.2% y/y) from 10.3%. Consumer spending growth was revised to 11.4% (1.8% y/y) from 11.3%, following a 2.3% Q4 rise. Consumer durable goods spending rose 49.2% (27.6% y/y), revised from 48.7%. Spending on nondurable goods rose 15.2% (6.0% y/y), revised from 14.0%. Services spending improved 4.2% (-3.3% y/y), revised from 4.6%.

Business fixed investment strengthened 11.7% (3.1% y/y), revised from 10.8%. It was the third straight quarter of strong growth.

Residential investment surged 13.0% (12.9% y/y), revised from 12.7%, to the highest level since the first quarter of 2007.

Government spending was unrevised at 5.7% (0.6% y/y). It was the strongest increase since Q2 2009.

Inventory decumulation reduced GDP growth by 2.7 percentage points, revised from 2.8 points, following two quarters of accumulation.

GDP price data were strengthened. The chain-weighted GDP price index rose 4.3% (2.0% y/y), revised from 4.1% and was the strongest gain since Q1'07. The PCE price measure advanced 3.7% (1.8% y/y), revised from 3.5%, while the business fixed investment price index rose 0.6% (0.4% y/y), revised from 0.5%. The residential investment price index surged 12.3% (7.2% y/y), revised from 11.4%, while the public sector price index strengthened a lessened 6.1% (2.4% y/y).

The GDP figures can be found in Haver's USECON and USNA database. USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts. Both databases include tables of the newly published not seasonally adjusted data. The Action Economics consensus estimates can be found in AS1REPNA.

Chained 2012 $ (%, AR) Q1'21 (Third Estimate) Q1'21 (Second Estimate) Q1'21 (Advance Estimate) Q4'20 Q3'20 Q1'21 Y/Y 2020 2019 2018
Gross Domestic Product 6.4 6.4 6.4 4.3 33.4 0.4 -3.5 2.2 3.0
  Inventory Effect (% point) -2.7 -2.8 -2.6 1.4 6.6 0.1 -0.6 0.0 0.2
Final Sales 9.2 9.4 9.2 2.9 25.9 0.3 -2.9 2.2 2.8
  Foreign Trade Effect (% point) -1.5 -1.2 -0.9 -1.5 -3.2 -1.9 -0.1 -0.2 -0.3
Domestic Final Sales 10.5 10.3 9.8 4.4 29.8 2.2 -2.7 2.3 3.0
Demand Components
  Personal Consumption Expenditure 11.4 11.3 10.7 2.3 41.0 1.8 -3.9 2.4 2.7
  Nonresidential Fixed Investment 11.7 10.8 9.9 13.1 22.9 3.1 -4.0 2.9 6.9
  Residential Investment 13.0 12.7 10.8 36.6 63.0 12.9 6.1 -1.7 -0.6
  Government Spending 5.7 5.7 6.3 -0.8 -4.8 0.6 1.1 2.3 1.8
Chain-Type Price Index
   GDP 4.3 4.1 4.1 2.0 3.5 2.0 1.2 1.8 2.4
    Personal Consumption Expenditure 3.7 3.5 3.5 1.5 3.7 1.8 1.2 1.5 2.1
       Less Food & Energy 2.5 2.3 2.3 1.3 3.4 1.6 1.4 1.7 2.0
    Nonresidential Investment 0.6 0.5 0.5 0.2 0.1 0.4 0.5 1.3 0.9
    Residential Investment 12.3 11.4 11.4 6.5 9.5 7.2 3.3 2.8 5.6
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