The economy grew 6.4% in Q1 amid stimulus checks, COVID-19 shots, looser business constraints

[peppertree]

A U.S. economy that was supposed to be ailing this past winter instead got a couple of big shots in the arm, kicking off what’s likely to be a historically strong year.

Economic growth accelerated in early 2021 as federal stimulus checks and fast-growing COVID-19 vaccinations left consumers flush with cash and ready to spend it just as more states lifted business constraints.

The developments pushed up a recovery that wasn’t supposed to gather force until midyear.

The nation’s gross domestic product, the value of all goods and services produced in the U.S., increased at a seasonally adjusted annual rate of 6.4% in the January-March period, the Commerce Department said Thursday. Economists surveyed by Bloomberg had forecast a 6.9% rise in GDP.

U.S. economic output is now just 1% below its pre-pandemic level and should reclaim that mark in the current quarter, Capital Economics says. After the economy contracted 3.5% in 2020 – its worst performance since just after World War II – GDP is poised for a historic turnabout.

Private spending grew at a 10.7% rate in the 1st quarter - led by a 41.4% annualized boost in durable goods spending.

Gross private domestic investment fell 5% in the quarter due to a $90 billion drawdown in inventories. Fixed investment grew at a 10.1% rate, led by equipment purchases of 16.7%.

Government purchases grew 6.3%, with defense declining at a 3.4% rate - and non-defense jumping by a record 44.8% annualized rate.

At: https://www.nytimes.com/2021/04/29/business/economy/united-states-gdp.html

[progree]

1. It grew at a 6.4% ANNUALIZED rate in Q1. I wish the headline writers would get it right.

It actually grew 1.6% during the quarter, which works out to 6.4% annualized. While I'm at it, these are seasonally adjusted and inflation adjusted numbers. (Yes, the body of the OP article does say 6.4% ANNUALIZED and seasonally adjusted. Not many people know that these are also inflation-adjusted, that's what the "real" means in the BEA's release)

https://www.democraticunderground.com/10142735985

From the source, the Bureau of Economic Analysis:

https://www.bea.gov/news/2021/gross-domestic-product-first-quarter-2021-advance-estimate

Real gross domestic product (GDP) increased at an annual rate of 6.4 percent in the first quarter of 2021 (table 1)

[peppertree]

2. Good point. That's how it would be reported in Europe and elsewhere.

Reporting growth at annualized rate just makes growth sound faster to the public (though it was in fact a good quarter).

Nor do other countries consider increased computer memory a form of "deflation" against durable goods prices.

Oh, well. None of us here make BEA policy.