Real GDP Grew Strongly in Q1-2021: Growth Set to Remain Very Strong in Coming Quarters

Strong Growth Rate in Q1 Could Have Been Even Stronger

Real GDP grew at an annualized rate of 6.4% in Q1-2021. Not only was the headline rate of GDP growth supported by strong consumer spending growth, but fixed investment spending also rose at a solid rate. Real GDP growth could have been even stronger had inventories not fallen sharply. Looking forward, we expect that real GDP growth will remain robust due, in large part, to pent-up demand for many services and the mountain of excess savings that many households have accumulated. Indeed, 2021 likely will be the strongest year for U.S. real GDP growth in nearly 40 years.

Broad-Based Gains in Spending in Q1

Data released this morning showed that real GDP grew at an annualized rate of 6.4% in the first quarter relative to Q4-2020, which more or less matched the consensus expectation. After nosediving roughly 10% between Q4-2019 and Q2-2020, real GDP is now only 0.9% shy of its pre-pandemic peak. As we discuss in more detail below, we forecast that output will surpass its previous peak in the current quarter. READ FULL ARTICLE >>