10% GDP growth? The U.S. economy is on fire, and is about to get stoked even more

Source: CNBC

  • Economic growth in the first quarter could hit 10%, according to a Federal Reserve tracker.
  • That comes with Congress poised to spend another $1.9 trillion to address various areas.
  • Manufacturing is at its highest level since 2018, with prices rising and inventories choked.
  • Employment remains the main weak spot, though some encouraging signs are emerging.

The U.S. economy has roared back to life in 2021, with first-quarter growth set to defy even the rosiest expectations as another fresh influx of cash looms.

Manufacturing data Monday showed the sector at its highest growth level since August 2018. That report from the Institute for Supply Management in turn helped confirm the notion among economists that output to start the year is far better than the low single-digit growth many had been predicting in late 2020.

The Atlanta Federal Reserve, which tracks data in real time to estimate changes in gross domestic product, now is indicating a 10% gain for the first three months of the year. The GDPNow tool generally is volatile early in the quarter then becomes more accurate as the data rolls in through the period.

That comes on the heels of a report Friday showing that personal income surged 10% in January, thanks largely to $600 stimulus checks from the government. Household wealth increased nearly $2 trillion for the month while spending rose just 2.4%, or $340.9 billion.

Those numbers, along with a burst of nearly $4 trillion in savings, pointed to an economy not only growing powerfully but also one that is poised to continue that path through the year.

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2 replies

  1. A $21 Trillion Treasuries Mystery Is Bedeviling Global Markets

    Bond traders have been saying for years that liquidity is there in the world’s biggest bond market, except when you really need it.

    Last week’s startling gyrations in U.S. Treasury yields may offer fresh backing for that mantra, and prompt another bout of soul-searching in a $21 trillion market that forms the bedrock of global finance. While stocks are prone to sudden swings, such episodes are supposed to be few and far between in a government-debt market that sets the benchmark risk-free rate for much of the world.

    Yet jarring moves occur periodically in Treasuries, forming a bit of a mystery as no two events have been the same. Some point to heightened bank regulations in the wake of the 2008 financial crisis. Scrutiny over liquidity shortfalls intensified in October 2014 when a 12-minute crash and rebound in yields happened with no apparent trigger. Panic selling during the pandemic-fueled chaos a year ago, exacerbated when hedge funds’ leveraged wagers blew up, brought the issue to the fore again.

    And then came last week, when the gap between bid and offer prices for 30-year bonds hit the widest since the panic of March 2020.

    https://www.bloomberg.com/news/articles/2021-03-02/a-21-trillion-treasuries-mystery-is-bedeviling-global-markets?srnd=premium&sref=eGA8az79

  2. Samsung Electronics Co. revealed additional details about its plans to build a cutting-edge semiconductor facility in the U.S. in a filing with the Texas government, making the disclosure as the Biden administration vows to make the security of the U.S. chip supply a national priority.

    The South Korean company plans to invest about $17 billion in its Project Silicon Silver and create about 1,800 jobs over the first ten years, according to an economic impact study prepared by a local consultant. Some $5.1 billion would go into buildings and property improvements, while $9.9 billion would be spent on machinery and equipment.

    The filing with the Texas comptroller warned the chips project is “highly competitive.” Samsung is evaluating alternatives sites in Arizona and New York, as well as in Korea.

    “Because of its strong ties to the local community and the successful past 25 years of manufacturing in Texas, Samsung Austin Semiconductor would like to continue to invest in the city and the state,” the study said.

    https://www.bloomberg.com/news/articles/2021-03-03/samsung-details-plans-for-17-billion-chip-facility-in-u-s?srnd=premium&sref=eGA8az79

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