1Q GDP Booms, Job Market Still Healthy

- Final 1Q GDP rose 5.6% versus estimates of a 5.6% gain and a prior estimate of a 5.3% rise.
- Final 1Q GDP Price Index rose 3.1% versus estimates of a 3.3% increase and prior estimates of a 3.3% increase.
- Final 1Q Personal Consumption rose 5.1% versus estimates of 5.2% and prior estimates of a 5.2% increase.
- Initial Jobless Claims for last week rose 313K versus estimates of 310K and 309K the prior week.
- Continuing Claims rose to 2409K versus estimates of 2430K and 2355K prior.

BOTTOM LINE: The US economy boomed at an annual rate of 5.6% in the first quarter, propelled by a surge in consumer spending, Bloomberg reported. Business investment rose at the fastest pace in six years. Inventory rebuilding, along with robust profits, should continue to spur corporate spending over the intermediate-term. The core PCE index, the Fed’s favorite inflation gauge, rose 2% for the quarter. I expect second quarter GDP to rise around average levels, consumption to moderate and the core PCE to decelerate.

First-time claims for unemployment benefits in the US rose last week while remaining at a level that suggests strength in the labor market, Bloomberg said. The four-week moving average of claims fell to 305,500 from 311,500 the prior week. The four-week average of total benefit rolls fell to 2.39 million, the lowest in almost 6 years. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, rose to 1.9% from 1.8% the prior week. I continue to believe the labor market will remain healthy without generating substantial unit labor cost increases over the intermediate-term.