January 17, 2022

Image source- copyrightalliance.com

US Economy Grew at Brisk 6.4% Rate in Q1

Powered by consumers and fueled by government aid, the U.S. economy is achieving a remarkably fast recovery from the recession that ripped through the nation last year on the heels of the coronavirus and cost tens of millions of Americans their jobs and businesses.

Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product – its total output of goods and services – accelerated in the January-March quarter from a 4.3% annual gain in the final quarter of 2020.

Economists say that widespread vaccinations and declining viral cases, the reopening of more businesses, a huge infusion of federal spending and healthy job gains should help sustain steady growth. For 2021 as a whole, they expect the economy to expand close to 7%, which would mark the fastest calendar-year growth since 1984.

“We are seeing all the engines of the economy rev up,” said Gregory Daco, chief economist at Oxford Economics. “We have an improving health environment, fiscal stimulus remains abundant and we are starting to see rebounding employment.”

Some economists say growth in the current April-June period could reach a 10% annual pace or more, driven by a surge in people traveling, shopping, dining out and otherwise resuming their spending habits.

A major reason for the brightening expectations is the record-level spending that is poised to flow into the economy. A $1.9 trillion package that President Joe Biden got through Congress in March provided, among other rescue aid, $1,400 stimulus payments to most adults.

On top of that, Biden is proposing two additional huge spending plans: a $2.3 trillion infrastructure package and a $1.8 trillion investment in children, families and education that the president promoted Wednesday night in his first address to a joint session of Congress.

Mark Zandi, chief economist at Moody’s Analytics, said before Thursday’s GDP report was released that all signs point to an economic boom this year, fueled by heavy government support and a flood of pent-up consumer demand as the economy further reopens.

“This should be a gangbuster year,” Zandi said. “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.”