US economy accelerates in first quarter and unemployment benefits decline

Economic growth in the United States accelerated in the first quarter, fueled by strong government support to families and businesses, paving the way for what is expected to be the best performance this year in nearly four decades.

The second-fastest growth in GDP (gross domestic product) since the end of 2003, reported Thursday by the United States Department of Commerce (29), left the country’s output just 0.9% below its end of 2019 level. exit from the pandemic recession, which began in February 2020, at the end of 2023.

The data is a boost for US President Joe Biden, who is celebrating his 100 days in the White House.

“At the start of 2021, the economy received a solid cocktail of improved health conditions and rapid vaccinations, along with an effervescent dose of fiscal stimulus and a steady flow of monetary policy support,” Lydia said. Boussour, Oxford Economic Chief Economist. “Looking ahead, we predict that the booming economy in the spring (in the northern hemisphere) will turn into a summer boom.”

Gross domestic product grew at an annualized rate of 6.4% in the last quarter, the government said in its estimate of expected GDP for the first three months of the year, after a rate of 4.3% in the last quarter. fourth trimester.

It was the biggest growth jump for a first quarter since 1984. Economists polled by Reuters predicted that GDP would grow at a rate of 6.1% between January and March.

Growth was driven by consumer spending, which increased at a rate of 10.7%, as households purchased motor vehicles, furniture, recreation and electronics. Consumer spending, which accounts for more than two-thirds of economic activity in the United States, rose 2.3% in the fourth quarter.

The government of former President Donald Trump provided nearly $ 3 trillion in emergency economic aid at the start of the pandemic, which led to record GDP growth in the third quarter of last year.

That was followed by nearly $ 900 billion in additional stimulus at the end of December. The Biden government offered another $ 1.9 trillion bailout in March, which sent 1,400 one-time checks to eligible families and extended unemployment benefits by $ 300 until early September.

The rapid acceleration of the economy could dampen the enthusiasm of some moderate Democrats about Biden’s ambitious economic agenda. The president unveiled a comprehensive $ 1.8 trillion package for family support and education spending on Wednesday in his first joint speech to the U.S. Congress. Republican lawmakers oppose further stimulus, now concerned about rising debt.

Some economists fear that massive public funding could trigger inflation. Many economists, including Federal Reserve Chairman Jerome Powell, expect higher inflation to be transient, arguing the labor market remains 8.4 million fewer jobs than at its peak. peak in February 2020.

A separate Labor Ministry report released Thursday showed 553,000 people applied for unemployment benefits in the week ending April 24, up from 566,000 in the previous period.

Data for the previous week has been revised to show 19,000 more claims received than previously. Although initial orders fell from a record 6.149 million in early April 2020, they remain well above the range of 200,000 to 250,000 considered compatible with a healthy labor market.

“We are probably still a few years away from pre-pandemic employment levels, but based on the strong economic momentum built up in the first quarter, we should return to a nearly fully functioning economy in the second quarter,” Robert said. Frick, Navy Federal Credit Union Business Economist.

The economy continued to grow at the start of the second quarter, with consumer spending reaching a 14-month high in April, thanks to the fiscal stimulus and the expansion of the Covid-19 vaccination program for all adult Americans. Americans have accumulated at least $ 2 trillion in excess savings.

Economists predict that growth in the United States this year could exceed 7%, which would be the fastest pace since 1984. The economy contracted 3.5% in 2020, the worst performance in 74 years.

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