The Day at a Glance | April 29 2021

The Top

*US economy grew slightly less than estimated during the first quarter of the year (6.4% vs 6.7%e).

*Biden calls for unity, presents the second part of his spending program ($1.8 trillion), a plan to increase taxes, and considers China to be a direct competitor in his first speech before Congress.

*FED maintains rates and purchasing programs unchanged; despite showing optimism regarding the outlook and will take time to withdraw stimuli.

*Inflation in Germany increases to 2.1% annual in April, in line with estimates.

Economic environment

The first forecast for the US 1Q21 GDP figure points towards a firm, 6.4% annualized rate of growth. The largest economy in the world recorded an acceleration in its recovery at the start of 2021. The economy increased 6.4% annualized during the 1Q21, boosted by consumption (10.7%). Investment and government consumption also increased (6.3%), while private investment (-5%), exports (-1.1%) and imports (5.7%) reduced growth. Regarding investment, the most important drop was seen in investments in inventories, which subtracted 2.64% from growth; in addition to a drop in non-residential structures (-4.8%). However, fixed investment increased 10.1% and maintained a strong rate of expansion. Imports grew as exports contracted, which is why the economy`s strength is based on consumption – which was reinforced with December`s approved fiscal stimulus. Moreover, the fiscal stimulus recently approved in March will very likely help maintain firm expansion in the 2Q21.