Trend watch and what’s new this week
U.S. COVID-19 infections are rising again, albeit modestly (slide 6). A handful of the largest states have seen cases increase (slide 8). However, U.S. hospitalizations have barely budged thus far (slide 9).
Within the activity-based data, most travel remains strong (slides 5 and 7). Hotel occupancy rebounded to 65.8% in the latest week, which is slightly above the pre-pandemic 5-year average. Restaurant bookings also flipped positive nationally, up 0.4% compared to pre-pandemic levels. However, weekly air passengers slipped modestly WoW to 14.7 million, but is 55% above the same week in April ’21.
First quarter GDP punched in the “I,” but consumers and businesses remained strong
Inflation, imports, and inventories all gouged real, or inflation-adjusted, gross domestic product (GDP), which unexpectedly fell 1.4% on an annualized basis in the first quarter. That missed the consensus expectations for an increase of 1.0% and was well below the fourth quarter pace of 6.9%. Yet, consumer and business spending reaccelerated compared to the fourth quarter and grew at their fastest paces in three quarters.
On a nominal basis, first quarter growth was 6.5% (slide 10). Despite the decline, we show that the current recovery still among the strongest in the past 70 years (slide 11).
Within other data, both personal income and spending rose in March (slide 12). Both have more than recovered from the pandemic-induced recession.
On slide 13, we highlight activity at the top U.S. ports. Unit volumes of shipping containers rose 5.8% month over month in March and have increased 8.9% in the past year.
Lastly, on slide 14, we updated the temp staffing data, which has softened in the past few weeks. However, this series is traditionally very seasonal, especially around holidays. Thus, we attribute the recent softness to the holidays (Easter/Passover/Ramadan).
While disappointed with the headline print of GDP, we were not surprised that overall demand remained strong. Consumer and business spending reaccelerated, which are among the reasons we believe that the U.S. economy will avoid a recession.
Unfortunately, we expect hotter inflation will persist, which means it will continue gouging real GDP for the next few quarters, though not as badly as the first quarter.
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