WASHINGTON—A surging economy can be seen in first quarter economic data showing the U.S. economy grew 6.4% in the first quarter, according to new data from the Commerce Department.
"GDP is still below is pre-pandemic level, but consumer spending and fixed investment are driving the first stage of the recovery,” said NAFCU’s chief economist and VP-research, Curt Long. "Consumer spending on durable goods, especially vehicles, accounted for nearly half of the overall growth during the quarter," said Long, NAFCU's chief economist and vice president of research. "Spending at bars and restaurants also improved, accounting for about 12% of overall growth. The distribution of stimulus checks resulted in another massive accumulation in savings, with the personal saving rate hitting 21% for the quarter."
According to the estimate, major contributions to real GDP came from personal consumption (+7%) – with most of the gain coming from the goods sector – and government spending (+1.1%). Gross private investment and net exports both deducted 0.9 percentage points.
PCE inflation, the Fed's preferred inflation metric, rose 3.4%. Meanwhile, core PCE inflation, excluding food and energy, rose 2.3%, the Commerce Data show.
‘The Good News’
"The good news is that consumers will be well positioned to support the service sector as it emerges from hibernation, but the extent to which they do so is still an open question," Long added. "The biggest drag on growth was from inventory accumulation, but that sets up well for the second quarter as businesses will need to restock. The domestic picture is rosy, but there are problems abroad as the virus rages. That will strengthen the dollar and weigh on exports. Nevertheless, NAFCU expects growth to surge in the second quarter and remain strong throughout the year.”