4 Stocks To Buy On Stronger Q1 GDP

It seems that the decline in first-quarter GDP was not as much as was estimated earlier. Fresh figures on Friday reflected a substantial upward revision which indicates that the economy has grown stronger with the arrival of spring. This is in keeping with other reports released recently which suggest that a strong revival is underway.

Apart from an increase in corporate profits, which was the highlight of the Q1 GDP release, consumer expenditure and a rebound in housing continued to boost GDP. This is why it may be a smart option to pick stocks from these sectors at this time.

Q1 GDP Revised Upward

The “second” estimate by the Bureau of Economic Analysis showed that the first-quarter output of goods and services increased at an annual rate of 0.8%, lower than the 1.4% recorded in the fourth quarter of 2015. However, first-quarter GDP data was revised upward from the previously estimated 0.5% rise.

The most notable feature of the report was evidence that corporate earnings were stabilizing. For a long time, this metric has been weighed down by a strong dollar and a downturn in the energy sector. Pretax corporate profits increased by 0.3%, the first sign of growth seen since early 2015.

Personal Consumption, Housing Powering Growth

Viewed as the engine of U.S. GDP, consumer spending was one area which continued to shine. Even though the estimate remained unchanged, personal consumption came in at a healthy 1.9% for the first quarter. Meanwhile, expenditure on new home construction jumped to 17.1% for the first quarter compared with the earlier estimate of 14.8%. This is the largest such increase in around four years.

Other economic indicators have also been providing similar signals. U.S. retail sales rose 1.3% last month, reaching its highest level since Mar 2015. Meanwhile, the final reading of consumer sentiment index released by University of Michigan came in at 94.7 in May to touch an 11-month high.

Our Choices

The U.S. economy has not grown as sluggishly as was earlier apprehended. Consumers continue to power economic growth and the housing sector continues to reflect improvement.