1Q21 real GDP grew at a 6.4% q\/q seasonally adjusted annual rate. Increases were broad based, with the exception of trade and inventories. Personal consumption, the largest part of the economy, surged an annualized 10.7%, the second-fastest pace since the 1960s. Economic output is now only 0.9% below peak 4Q19 real GDP, and an inventory rebound could set the stage for a double-digit surge in real GDP in the second quarter. The ISM Manufacturing PMI eased back to 60.5% in April, from a 37-year high of 64.7% in March, as manufacturers continue to see very strong market demand but grapple with supply chain headwinds. Importantly, the ISM Prices Paid index rose further to 89.6 (vs. 85.6 in March), indicating that inflation pressures are continuing to increase as the economy reopens.<\/p>\n\n\n\n
Despite falling sharply short of consensus expectations, the April jobs report showed moderate improvement in the labor market and reflects a pandemic economy transitioning to a post-pandemic economy. Nonfarm payrolls increased by 226,000, with strong gains in leisure and hospitality, offset by declines in temporary workers, couriers and messengers, and food and beverage workers. While the unemployment rate rose slightly to 6.1% from 6.0%, the labor force participation rate rose to 61.7% in April. Notably, wages spiked 0.7% m\/m and 0.3% y\/y. Removing the base effects from last April, wages rose 8.5% on a y\/2y basis.<\/p>\n\n\n\n
The 1Q21 earnings season has been impressive, with 435 companies having reported (88.5% of market cap). Our current estimate for 1Q21 earnings is $47.04. Thus far, 86% of companies have beaten on EPS estimates, and 72% have beaten on revenue estimates. Many companies have now recovered to the revenue\/EPS levels of 2019 and are setting fresh highs. Blowout reports from big tech also highlight how the pandemic has accelerated key secular growth themes. Oil prices (+48% y\/y) and the U.S. dollar (-7% y\/y) have provided additional tailwinds to earnings. However, elevated expectations and valuations have caused market recovery plays to pause, awaiting new catalysts.<\/p>\n\n\n\n
Inflation has now reached the FOMC\u2019s 2% target, as the headline PCE price index rose +0.5% m\/m and +2.3% y\/y in March. The core PCE deflator also accelerated to +0.4% m\/m and +1.8% y\/y, matching market expectations. Headline CPI for March was a little stronger than expected, rising +0.6% m\/m and +2.6% y\/y, while core inflation rose +0.6% m\/m and +1.6% y\/y. Energy was a main contributor to higher inflation, as prices rose +5.0% m\/m.<\/p>\n\n\n\n
The FOMC maintained the federal funds target rate in a range of 0.00%-0.25% and left the pace of asset purchases unchanged. In addition, the median federal funds rate outlook\u2014as measured by the \u201cdot plot\u201d\u2014continues to imply no rate adjustments through 2023. Chairman Powell pushed back on tapering chatter and reiterated their view that higher inflation over the next few months will be transitory and thus not meet the threshold for tighter policy. Powell acknowledged the improved growth backdrop, but said that they will need to see it persists to give the Fed comfort about achieving \u201csubstantial progress.\u201d The Fed also continued to underscore \u201crisks to the outlook\u201d from the coronavirus pandemic.<\/p>\n\n\n\n
This weekly update provides a snapshot of changes in the economy and markets and their implications for investors.<\/a><\/strong><\/p>\n\n\n\n \u2014<\/p>\n\n\n\n Originally Posted on May 10, 2021<\/p>\n\n\n\n This website is a general communication being provided for informational purposes only. It is educational in nature and not designed to be a recommendation for any specific investment product, strategy, plan feature or other purposes. By receiving this communication you agree with the intended purpose described above. Any examples used in this material are generic, hypothetical and for illustration purposes only. None of J.P. Morgan Asset Management, its affiliates or representatives is suggesting that the recipient or any other person take a specific course of action or any action at all. Communications such as this are not impartial and are provided in connection with the advertising and marketing of products and services. Prior to making any investment or financial decisions, an investor should seek individualized advice from personal financial, legal, tax and other professionals that take into account all of the particular facts and circumstances of an investor’s own situation.<\/p>\n\n\n\n Opinions and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. The views and strategies described may not be suitable for all investors.<\/p>\n\n\n\n INFORMATION REGARDING MUTUAL FUNDS\/ETF:<\/p>\n\n\n\n Investors should carefully consider the investment objectives and risks as well as charges and expenses of a mutual fund or ETF before investing. The summary and full prospectuses contain this and other information about the mutual fund or ETF and should be read carefully before investing. To obtain a prospectus for Mutual Funds: Contact JPMorgan Distribution Services, Inc. at 1-800-480-4111. Exchange Traded Funds: Call 1-844-4JPM-ETF.<\/em><\/strong><\/p>\n\n\n\n J.P. Morgan Funds and J.P. Morgan ETFs are distributed by JPMorgan Distribution Services, Inc., which is an affiliate of JPMorgan Chase & Co. Affiliates of JPMorgan Chase & Co. receive fees for providing various services to the funds. JPMorgan Distribution Services, Inc. is a member of FINRA<\/a> FINRA’s BrokerCheck<\/a><\/p>\n\n\n\n INFORMATION REGARDING COMMINGLED FUNDS:<\/p>\n\n\n\n For additional information regarding the Commingled Pension Trust Funds of JPMorgan Chase Bank, N.A., please contact your J.P. Morgan Asset Management representative.<\/p>\n\n\n\n The Commingled Pension Trust Funds of JPMorgan Chase Bank N.A. are collective trust funds established and maintained by JPMorgan Chase Bank, N.A. under a declaration of trust. The funds are not required to file a prospectus or registration statement with the SEC, and accordingly, neither is available. The funds are available only to certain qualified retirement plans and governmental plans and is not offered to the general public. Units of the funds are not bank deposits and are not insured or guaranteed by any bank, government entity, the FDIC or any other type of deposit insurance. You should carefully consider the investment objectives, risk, charges, and expenses of the fund before investing.<\/p>\n\n\n\n INFORMATION FOR ALL SITE USERS:<\/p>\n\n\n\n J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide.<\/p>\n\n\n\n NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE<\/p>\n\n\n\n