The U.S. economy is experiencing a powerful rebound
What happened
The American economy showed signs of surging momentum, as the Department of Commerce reported last week that U.S. gross domestic product (GDP), a measure of the total size of the economy, grew at a 6.4 percent annual rate in the first three months of 2021. Hiring accelerated in March, with 916,000 jobs added—a sevenmonth high. Consumer spending, which represents more than two-thirds of the U.S. economy, rose by 10.7 percent in the first quarter, with purchase of cars, furniture, and other durable goods growing by an extraordinary 41.4 percent. Economists and financial analysts predict that overall the economy will expand at least 6 percent this year, the fastest rate of growth since 1984.
The rebound, however, remains vulnerable to headwinds. Growth in the service sector still lags, even as employers say that they are unable to fill positions. Some 6.3 million Americans did not work in March because of the need to care for children at home; other workers remain worried about contracting Covid. About 8 million jobs shed after March 2020 have not returned. Meanwhile, $4 trillion in spending proposals have raised fears of inflation, heightened by shortages of supplies ranging from lumber to microchips. Still, experts see reasons for confidence. “We were in this deep, dark hole a year ago,” said Moody’s chief economist Mark Zandi, “but now we can clearly see getting out of it, and getting out quickly.”
What the columnists said
“These are astonishing numbers,” said Aki Ito in Insider.com. They’re partially explained by the pandemic’s record-breaking economic toll, but we’re also benefiting from vaccinations, low interest rates, and stimulus spending boosting demand. “The rosy outlook is first and foremost a triumph of economic policy.” Though the U.S. botched its public-health response to the pandemic, it spent generously to backstop the economy. So even in a year of deep job losses, the cushion of the stimulus allowed household incomes to rise 6 percent. “And consumers aren’t done spending those checks.”
“That doesn’t mean a new ‘Roaring 20s’ is right around the corner,” said Robert Burgess in Bloomberg.com. The U.S. lost nearly 600,000 people to the novel coronavirus, and potentially six times as many survivors are suffering from debilitating long-term symptoms. And while Americans hold some $2 trillion in excess savings, recent sales figures suggest many are still hesitant to spend. The virus could even give disease experts a nasty surprise with a vaccine-resistant mutation. Just as the economy rebounded at a rate that some experts said would not be achieved for many years, it could turn around and leave today’s bullish predictions facing “a different reality.”
Sure, things could still go wrong, but the “Biden boom” is no fluke, said Alan Blinder in The Wall Street Journal. Fiscal hawks may be incensed about the $28 trillion–and-counting national debt, and yes, massive government spending could cause inflation. Or “the battle between the variants and the vaccines could take a turn for the worse.” But for now we are seeing the best economic numbers since the 1983-84 boom that “led to Ronald Reagan’s declaration of ‘morning in America.’”