According to the data published today, the US GDP growth was announced as 6.4% in 1Q21. Increase in real GDP; reflecting mainly increases in personal consumption expenditure (PCE), non-residential fixed investment, federal government spending, fixed housing investment and state and local government spending; partially offset by exports as well as decreases in private inventory investments.
The increase in PCE reflects increases in durable goods (motor vehicles and parts), nondurable goods (food and beverage) and services (food services and accommodation). While the increase in non-residential fixed investments reflected increases in intellectual property products (software) and equipment (IT); The increase in federal government spending is primarily related to payments to banks for processing and managing Pay Check Protection Program loan applications, as well as the purchase of COVID-19 vaccines for distribution to the public. The decrease in private inventory investment can be explained primarily by the decrease in retail trade inventories. This shows that the activity and demand in the economy increased and stocks decreased accordingly. Of course, the variables have changed and developed a lot after 1Q21. Therefore, the dynamics of 2Q21 are different and stronger.
In the week ending May 22, the first seasonally adjusted jobless claims were 406,000, down 38,000 from the previous week’s 444,000. This is the lowest for initial claims since March 14, 2020, at 256,000. The 4-week moving average was 458,750, down 46,000 from the previous week’s average of 504,750. This is the lowest for this average since March 14, 2020, at 225,500. It is related to both return to work and reduced applications due to support checks.
New orders for durable goods fell 1.3% in April. New orders, excluding transport, increased by 1%. New non-defense orders remained virtually unchanged. The transportation group, which fell two months in a row, declined by 6.7%. There is a periodic slowdown in the headline data. However, the 2.3% increase in core orders that exclude aircraft and the defense group, which are the most reduced data, is a reflection of the strengthening in demand and economic recovery.
On the one hand, the Fed would say that inflation is temporary, effectively the money inflows from the Central Bank to the market are not increasing. The Fed withdraws a certain amount of liquidity from the market through reverse repo transactions. We will understand that it is difficult to keep the anchor in inflation expectations from the movement in bond interest rates, which will be a 10-year yield move to 2% if the 1.70% – 1.75 band is exceeded. With the Fed, the market view is moving in such a different direction for the first time. During the hard periods of the pandemic, interest rates cut to 0 and bond rates were also compatible. However, gap was opened between the funding rate and the bond rates. The Fed will try to make communication as a formality as possible. Therefore, the “inflation is temporary” statements seem to be for pouring cold water over tapering concerns within the framework of the desire for a smooth transition. The June meeting will clearly mark the way.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
