Raising the Bar Even Further

The confluence of stronger-than-expected reports has prompted us to raise our estimates for economic growth this year. The mini boom we were expecting is arriving early, and consumer spending and business investment both look to be stronger than our previous above-consensus forecast.

 

Summary

U.S. ReviewRaising the Bar Even Further

  • This week’s lighter economic calendar allowed forecasters more time to assess the implications from the prior week’s blowout retail sales report. We have revised our forecast for Q1 growth up to a 5.5% pace from 4.8% previously, and growth for the year is now pegged at 6.5%, up from 6.4%.
  • Sales of existing homes fell 3.7% in March, but realtors are selling homes faster than ever and often well above the asking price. Inventories of homes remain near a record low, and the median price of an existing home surged 17.2% over the past year.
  • Initial unemployment claims fell more than expected during the latest week, dropping to 547,000 claims—the lowest level since the pandemic began. The four-week moving average for the April survey week was 651,000, down from 751,750 from the March survey week, setting the stage for another strong employment report.
  • New home sales surged 20.7% in March, and sales for February were revised significantly higher. Builders report exceptionally strong demand and are selling homes faster than they can build them.

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