‘Godzilla vs. Kong’ Has Nothing on GDP and Corporate Earnings

Douglas Cote

Douglas Coté, CFA

Senior Portfolio Manager, Head of Global Perspectives

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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