GDP growth signals a soaring future

People across America’s broad spread will confirm that the pandemic has caused worry and a diminishing economy during the past pandemic year.

But the latest government figures show that 2021’s first quarter has provided three months of 6.4% growth.

The nation’s economic experts are predicting the rebound is likely to grow even stronger in the months ahead.

That would mean restoration of millions of jobs and putting the US on track in 2021 for the fastest growth since the 1980s.

Expected to keep the boom going are the combined effects of massive federal spending proposed by President Joseph Biden, greater vaccination rates that will encourage millions of people to resume spending and billions of dollars in COVID-inspired savings and pentup demand for materials such as lumber and semiconductors.

Both personal income and the saving rates rose sharply in the first quarter, as did the price of goods.

The Wall Street Journal reported that the 6.4% seasonally adjusted annual rate provided the fact that the world’s largest economy was within 1% of its peak, reached in late 2019 before the Coronavirus pandemic hit the US.

“If you had asked me a year ago where we be today, I certainly would not have said we would have recouped the pre-pandemic levels of economic activity,” Gregory Daco, chief US economist at Oxford Economics said.

Just a year ago, the economy was sharply contracting — output in the second quarter fell by a record annual rate of 31.4% — and the unemployment rate soared to 14.8% in April, a post-World War II high.

Congress responded quickly, approving several packages totaling about $5 trillion in aid for households and businesses.

The Federal Reserve pushed its benchmark interest rate to near zero to lower borrowing costs.

With the rise of consumer spending — the biggest driver of economic demand in the US — there are signs of supply failing to keep up.

Consumer spending is the locomotive; it jumped to a 10.7% annual rate in the first quarter, driven by the purchase of autos, and food and beverages.

Spending on services had been relatively muted early this year. Now, as more people get vaccinated and feel more comfortable traveling, eating out and visiting sports and entertainment venues, it’s not just spending on stuff but services that is expected to take off.