On Thursday at 20:30, the U.S. released the preliminary annualized quarterly real GDP for the first quarter, the data recorded at 6.4%, much higher than the previous value of 4.5% and also higher than the expected value of 6.1%. At the same time, the U.S. initial jobless claims for the week to April 24 were recorded at 553,000, slightly higher than expected and the previous value; the preliminary quarterly rate of U.S. real personal consumption expenditures in the first quarter was recorded at 10.7%, a new high since the third quarter of last year, and also higher than the expected 10.5%.
Spot gold was briefly slightly higher after the data came out, however, it then continued to dip, moving $12 lower in the 30 minutes to press time. The gold market was also hit by two large orders, with the COMEX’s most active gold futures contract trading at 21:15 GMT for a total contract value of $584 million in one minute, followed by a total contract value of $434 million at 21:20 in one minute.
Official interpretation: reflects the effectiveness of the bailout bill
The U.S. Commerce Department’s Bureau of Economic Analysis noted that real U.S. gross domestic product grew at an annualized rate of 6.4 percent in the first quarter of 2021, reflecting the continued economic recovery, the reopening of businesses and the effectiveness of the government’s continued response to the New Crown Pneumonia outbreak. In the first quarter of the year, government assistance payments such as direct economic impact payments, expanded unemployment benefits and Wage Protection Program loans were made to households and businesses through the New Crest Pneumonia Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act.
In addition, quarterly real GDP growth reflected increases in personal consumption expenditures, nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending, which were partially offset by declines in private inventory investment and exports.
Market Commentary: Rare Growth Rate in 18 Years, Stronger in Real Terms
CNBC noted that U.S. economic activity started the year with a flourish as widespread vaccinations and government spending helped the country almost return to the economic levels seen before the outbreak. U.S. GDP grew 6.4 percent in the first quarter, the second-fastest GDP growth rate since the third quarter of 2003, after the economy reopened and hit its best in the third quarter of last year. The latest data reflects the significant progress the U.S. economy has made since the epidemic embargo measures were adopted in 2020.
Forexlive analysts point out that there is a lot of information reflected in this data, which reflects economic fundamentals that are even stronger than the overall situation. Trade and inventories were the main headwinds to economic growth in the first quarter, but consumer spending and investment bode well.
CNN commented that the data was higher than economists expected and also above the 4.3% growth rate at the end of 2020. This means that the U.S. economy is still on the road to recovery after the massive economic contraction caused by last year’s outbreak.
Financial website Marketwatch points out that the U.S. economy has made great strides in the first three months of the year thanks to more people getting vaccinated, a drop in new coronavirus infections and the approval of a huge $1.9 trillion stimulus package by the U.S. government.
Without supply bottlenecks and shortages of key materials curbing production, economic growth would have been even stronger. Economists predict that if bottlenecks are eased, new coronavirus cases continue to decline, and most government restrictions are lifted, growth will be even faster in the coming months, with the U.S. economy expected to grow 8.2 percent in the second quarter.
Compared to other countries, the U.S. economy is recovering relatively quickly, thanks to two rounds of the U.S. government’s epidemic relief program and its efforts in calming tensions.
Previously, former President Donald Trump’s administration distributed nearly $3 trillion in bailouts to society during the epidemic, which allowed the U.S. to grow GDP at a record pace in the third quarter of 2020. Then in late December, the Trump administration introduced another $900 billion stimulus bill. The Biden administration also introduced a $1.9 trillion relief bill in March, which provided for a one-time $1,400 cash payment to eligible households and extended $300 in unemployment assistance until early September.
The assistance boosted domestic consumer demand in the U.S., and service industries such as restaurants and bars were able to reopen.
However, despite an expected rise in first-quarter GDP and a return to levels slightly below the end of 2019, it will still take at least a few years for the U.S. economy to return to pre-epidemic levels. Early Thursday morning, the Federal Reserve acknowledged the growing activity in the U.S. domestic economy, but showed no signs that the Fed is ready to reduce its support for the recovery.