Today's U.S. GDP release showed that the economy grew at an annualized rate of 6.4% in Q1, the fastest since Q2, 2000’s 7.5%. Today’s release was blockbuster in every measure: Consumption jumped to 10.7%; fixed investment was up 10.1%; residential spending up 10.8%; and Government consumption bounced up 6.3%. Action Economics, LLC points out that “the big Q1 GDP gain documents the updraft from vaccine distributions and two rounds of fiscal stimulus during Q1.”
Meanwhile, the S&P 500 Q1 corporate earnings growth is absolutely crushing it thus far in the reporting season. Refinitiv (Lipper) reports an astounding 56.4% EPS growth with about half of the index having reported so far. Expectations have risen to 39.2% once completed, and we expect this to rise further as soon as all 500 companies have reported. As we said in our March Madness Quarterly Outlook, “This may be a once in a generation boom, so we advise to capitalize on it now and worry about the unintended consequences in the future.
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