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Weekly Economic Monitor -- What Does the 1Q21 Data Tell Us

By: Scott J. Brown, PH.D., Raymond James

What Does the 1Q21 Data Tell Us About the Rest of the Year? – The Bureau of Economic Analysis reported that Gross Domestic Product (GDP) rose at a 6.4% annual rate in the advance estimate for the first quarter. However, that understates the economy’s strength. Private Domestic Final Purchases, a better measure of underlying domestic demand, rose at a 10.6% pace. Looking at the various components tells a story, one that ought to lead to reversals in some areas and strength in others. While many have obsessed about temporary inflation pressures from tight supply chains, the amount of slack in the labor market is potentially a bigger concern to the outlooks for growth and inflation.

This Week – In a typical (pre-pandemic) April, the economy would add a little over one million jobs prior to seasonal adjustment. We should easily surpass that this April, but seasonal adjustment can be tricky. The unemployment rate is likely to edge lower, despite an expected pickup in labor force participation. Keep an eye on the employment/ population ratio. The April ISM surveys should be consistent with a strengthening economy.