Hello, I’m Marcie Wright, Managing Director of Private Bank Portfolio Management at Fifth Third Bank, with this week’s Economic Beat.
U.S. equity benchmarks ended mostly lower on the week, except for the S&P 500, which held onto a slight gain to close the week. The benchmark 10-year U.S. Treasury yield moved higher – ending at 1.62 percent. West Texas Intermediate Crude Oil also rose week-over-week to over $63 per barrel. Although benchmarks ended mixed last week, there was other good news. Weekly jobless claims moved lower, U.S. Consumer Confidence soared to 121.7, and COVID-19 cases continued to trend lower. First quarter earnings season continued in full swing—roughly 60 percent of S&P 500 companies have released earnings reports and 86 percent of those companies have beat expectations. Observers watched for the news from the Federal Reserve and the first release of first quarter GDP for the U.S. economy.
In economic news, the Federal Open Market Committee, as anticipated, voted to keep short-term interest rates unchanged at a range of zero to a quarter of one percent. Asset purchases also remained constant at a $120 billion pace. The Fed upgraded its assessment of the U.S. economy, while also reiterating its pledge of support, stating, "Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened." At Fifth Third Bank, we continue to believe short-term interest rates will remain low and Fed policies will remain dovish over the intermediate term.
In other economic news, first quarter U.S. GDP rose at a 6.4 percent annualized rate – strong growth, although a bit lighter than the expected growth rate of 6.7 percent. Consumer spending, which is the largest component of GDP, rose at an annualized rate of 10.7 percent – this is the second-biggest gain since the 1960s. The personal income and spending releases for March weave right into this historic advance. Personal income jumped 21.1 percent in March – the biggest monthly gain since 1946. Personal spending also rose more than expected month-over-month at 4.2 percent. At Fifth Third Bank we believe we are in the very early stages of the economic expansion and we continue to favor risk assets.
As we turn the calendar to May, we’ll be watching for the many economic releases that come out at the start of each month. Among the reports out this week are the Institute for Supply Management Manufacturing and Services Index releases for April. Both reports are expected to move higher month-over-month. We’ll also be looking for reports on the U.S. labor market. Economists expect another healthy month of gains in payrolls as the U.S. economy continues to reopen. The unemployment rate for April is forecasted to move slightly lower to 5.7 percent.
As always, we’ll be watching and reporting back to you next week.
