US GDP: Auspicious start of the year – UOB

Senior Economist at UOB Group Alvin Liew reviews the recent US GDP results for the January-March period.

Key Quotes

“US 1Q 2021 GDP increased by 6.4% q/q SAAR (slightly missing Bloomberg Est 6.5%, but much better than UOB Est 2.0%), up from 4.3% in 4Q 2020. Excluding the record 3Q 2020 GDP surge, this would be the fastest GDP growth quarter since 3Q 2003.”

“The growth in 1Q was largely attributed to the strength in private consumption, while business & residential investments and government’s consumption expenditure & investment also contributed, albeit a much smaller share of the overall growth.”

“The robust 1Q GDP reading together with the recent set of very promising US economic data, adds to the positive US growth outlook, anchored by the continued success in the rollout of vaccinations across the US, and massive amounts of fiscal stimulus. That said, the growth trajectory remains highly uncertain (i.e. the tapering in the take-up rate of vaccination demand and new coronavirus variants) but on balance, there is more positive sentiment than fears of a COVID-19 driven correction. We now project that US GDP will extend its rebound meaningfully with a 13.4% increase in 2Q. The US full-year 2021 GDP is now expected to expand by 6.8% (from the previous projection of 6.3% made in Mar).”