The market currently expects the US real GDP annualized quarterly rate for the first quarter to be 2.4%.
The Zhitong Finance App learned that the US GDP data for the first quarter will be released tonight. The market currently expects the US real GDP annualized quarterly rate for the first quarter to be 2.4%. A recent report released by the US Congressional Budget Office estimates that the number of immigrants has exceeded previous expectations. Since then, economists have generally raised their forecasts for the US economy. The data released tonight is expected to confirm that the US economy will continue to prosper, driven by a surge in immigration.
Notable parts of the US GDP data for the first quarter include:
1. Consumer expenses
Personal consumption spending accounts for about two-thirds of US GDP and is likely to continue to drive economic growth in the first quarter. January and February data showed strong growth in service spending, while commodity spending declined slightly. Economists led by Anna Wong said, “Consumer retail spending increased in March, while spending on food services remained stable.” “Driven by an increase in labor supply, strong employment supports overall income growth, which in turn supports consumption.”
2. Investment
Business investment growth in the US is likely to be more moderate in the first quarter. According to monthly data on durable goods orders released on Wednesday, shipments of non-defense capital goods in March fell at an annual rate of 1.5%, indicating a possible reduction in equipment spending. Citibank economists Alice Zheng and Andrew Hollenhorst said, “There have been some fluctuations in recent data due to weather and flight orders. Overall, however, we expect commercial investment to continue to be dragged down by rising interest rates.”
On the other hand, Goldman Sachs economist Spencer Hill said that housing investment is likely to contribute the most to GDP growth since 2020. According to the data, the average mortgage interest rate for the first three months of this year was about 0.5 percentage points lower than in the last quarter of 2023, which helped boost sales of new and existing homes, even though mortgage interest rates have risen again in recent weeks.
3. Government expenditure
Economists also believe that government spending will be an important contributor to US GDP growth in the first quarter. This is partly due to state and local governments. The data shows that in the first quarter, the number of local government employees increased at an annual rate of 3.4%, the highest level since 2021, while the number of state government employees also showed a similar increase.
Michael Reid, chief US economist at RBC Capital Markets, said: “We expect government spending to become the second-largest contributor to economic growth as state and local governments continue to fill the post-pandemic spending gap.”