GDP Preview: US Economy Likely Expanded at a Solid Pace

The awaited GDP data from the US is predicted by the Dow Jones consensus prediction to demonstrate that the economy grew steadily in the first three months of the year, with an annualized growth rate of 2.4% for Q1. This is slightly less than the 2.5% full-year growth rate from the previous year and a step down from the 3.4% growth rate in the fourth quarter of 2023. Even so, it still shows that the economy is growing steadily and is outperforming the 2.2% average rate that was seen between the Covid epidemic and the 2008–2009 financial crisis.

According to some economists, the US economy is strong because of a strong labour market that fosters rapid income growth and consumer spending. As demand continues to catch up with consumption and certain segments of the housing sector, economists predict that the economy will expand at a 2.6% annual rate, which is marginally faster than predicted. Over two-thirds of all activity in the fourth quarter came from consumer expenditure, which is thought to be supported and accelerated by the labour market.

A full percentage point below the second half of 2023 but far above the Street outlook for the first quarter, Goldman Sachs is projecting a growth rate of 3.1%. The bank’s projection is predicated on four main events: a robust increase in residential investment, a resurgence in manufacturing and car output, and an additional quarter of robust consumption growth. Goldman anticipates consumption to increase by 3.3%, above consensus, thanks to significant positive revisions in the Commerce Department’s March retail sales report and a 1.1% increase in core retail expenditure.