Preliminary data released by the Commerce Department on Thursday showed an acceleration in the pace of U.S. economic growth in the first three months of 2021.
The report said real gross domestic product surged up by 6.4 percent in the first quarter after jumping by 4.3 percent in the fourth quarter of 2020. Economists had expected GDP to increase by 6.5 percent.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said the first quarter growth left the level of GDP only 1 percent off its pre-pandemic peak in the final quarter of 2019.
“It will recapture that level in the second quarter and, with the pace of growth we expect, any remaining output gap should be eliminated before the end of this year,” Ashworth said.
The faster GDP growth was led by a substantial increase in consumer spending, which was boosted by two rounds of stimulus checks.
The report showed consumer spending spiked by 10.7 percent in the first quarter after climbing by 2.3 percent in the fourth quarter.
The Commerce Department said the GDP growth also reflected increases in non-residential fixed investment, federal government spending, residential fixed investment, and state and local government spending.
Meanwhile, decreases in private inventory investment and exports helped limit the upside along with an increase in imports, which are a subtraction in the calculation of GDP.
The report also showed core consumer prices, which exclude food and energy prices, jumped by 2.3 percent in the first quarter following a 1.3 percent increase in the fourth quarter.