Fueled by pent-up consumer desires for everything from home improvement essentials to restaurant dining, the US economy grew at an amazing 6.4% annually in the last quarter in a tremendous show of strength as the country strongly rebounds from the pandemic-driven recession.
The US’ gross domestic product, or total output of goods and services, accelerated even further from the already-impressive 4.3 % annual growth rate experienced in the past quarter of 2020, according to government figures that were released last week.
Growth during the period from April to June is expected to increase even over those encouraging figures, with some economists saying that that the rebound could amount to 10% growth — or even more, according to a report from the Associated Press this week.
Traveling, shopping, dining see huge surge after worst of pandemic over
All this is driven by the tremendous surge in the amount of people now traveling, shopping and dining after more than 100,000,000 Americans have become fully vaccinated against the coronavirus, a staggering achievement considering inoculations only began to be administered in mid-December of 2020.
Last Thursday the government stated that the numbers of Americans who were seeking unemployment reached a new low for the pandemic that week. Although there are still a number of layoffs, they are decreasing overall as the economy gradually opens back up.
Sung Won Sohn, a finance and economics professor at Loyola Marymount University, told the Associated Press even before the most recent figures were released “The economy is on fire.
“It is being fueled by the vaccine, which is the best economic stimulus we have, plus massive government spending.”
Mark Zandt, the chief economist at Moody’s Analytics, stated before the report came out that everything looks especially rosy on the horizon at the moment and there could very well be an economic boom in 2021, fueled not only by the government support but also the incredible amount f pent-up demand on the part of consumers as the economy reopens further.
“Should be a gangbuster year” for US economy
“This should be a gangbuster year,” he stated. “I have been forecasting the economy for almost 30 years, and I can’t remember a time when I have been as confident as I am today.”
All the figures gather so far point to a remarkably swift exit from the devastating economic recession that hit the American economy, costing tens of millions of Americans their jobs.
The successful vaccination campaign, coupled with the reopening of more businesses, the infusion of cash from government programs and the job gains that have already happened are fueling the steady growth, which has no signs of abating at present.
Over the course of the year, the government experts predict that there will be a 7% expansion — the fastest of any gains made since way back in 1984, during the Reagan administration.
The $1.9 trillion spending package President Biden was able to push through Congress last month allowed record amounts of aid to enter the economy, with new stimulus payments of $1,400 going to every adult.
Biden is also planning on putting forward a $2.3 trillion infrastructure package on top of a $1.8 trillion investment in children, families and education which he spoke about in his first address to a joint session of Congress last Wednesday.
The economy is expanding at such a rate that fears of inflation have begun to rear their heads in some circles. The Federal Reserve’s extraordinarily low interest rates, meant to encourage both borrowing and spending, have done their job so well that they have provided more than sufficient buoyancy to the American economy.
Federal Reserve foresees no change in policy at present
Experts have noted that the strong demand has even caused supply bottlenecks to occur and items like semiconductors, used in a plethora of industries including the automotive, technology and medical device sectors, are very difficult to procure at the moment.
Any surge in the inflation rate, however, would be only temporary, according to Federal Reserve Chair Jerome Powell, who said this week that the Fed would like to see a “substantial and sustained recovery” before it would consider changing its current support for the economy.
He told reporters that the central bank is not even close to starting to pull back from its ultra-low rates at the present time.
It is clear to financial observers that the rebound of the American economy has been remarkable, considering the body blow taken by the country beginning in March of last year with the first coronavirus lockdowns.
With many businesses shut down, the American economy contracted by a pace that would have amounted to 31 percent annually during the quarter from April to June. In the months afterward, however, with restaurants and many manufacturing and other businesses reopening, it rebounded appreciably.
Consumer spending up 10.7%
US employers added jobs steadily after the nadir of the first lockdown period, with March 2021 showing an addition of 916,000 positions — marking the largest burst in hiring since August of 2020.
Just as importantly, the pace of layoffs has slowed, and retail spending has surged. Manufacturing output has soared and experts say consumer confidence has now hit the highest point since the beginning of the pandemic.
Last week’s GD report showed a whopping 10.7% increase in consumer spending during the January – March period — in the sector which accounts for two-thirds of the economy. Such spending had slowed to barely a trickle, just 2.3% in the final three months of 2020.
But it isn’t just consumer trifles that are flying off the shelves; business investment has risen at an annual rate of almost 10%, showing that there has been a spending spree on needed equipment to keep up with demand.
The housing market, seeing a boom in many rural areas as city dwellers headed for the hills after the pandemic started, has shown solid growth as well due to the extremely low mortgage rates, growing at the equivalent of 11% annually in the first quarter of this year.