The U.S. economy grew by 6.4% in the first three months, setting the stage to what economists believe will be the best year in nearly seven decades.
The Commerce Department reported Thursday that the growth in gross domestic product, which is the country’s total output, was unchanged from the two previous estimates. This indicates an acceleration of the 4.3% pace recorded in the fourth quarter.
Economists believe economic growth is continuing to accelerate in this quarter. This month’s quarter ends with the release of vaccines and Americans wanting to go outside are being welcomed back by newly reopened businesses. The government’s approval of nearly $3 trillion in financial assistance since December is partly responsible for the increase in consumer activity.
Further economic data released Thursday shows that a nation has quickly regained its footing after being hit hard by a global pandemic. However, the number of jobless remains stubbornly at over 400,000.
According to Lydia Boussour (lead U.S. economist at Oxford Economics), “This summer will prove hot for the U.S. economic.” “Consumers with piles of savings and a better health will feel the need to indulge in the services and experiences that they were deprived of during the pandemic.
Boussour predicted that the GDP growth rate for the April-June quarter would rise to 12% annually and that the growth rate for the whole year will be 7.5%. This would be the highest annual performance since 1951.
Even economists who project 2021 growth at 6% to 7.7% believe this year’s growth will be the strongest since 1984’s 7.2% gain, when the U.S. emerged from an extended and painful recession.
Economists predict that growth in this quarter will be sufficient to lift GDP output above its previous peak at the end 2019 before the pandemic hit and cut off the longest period of economic expansion in U.S. History.
Thursday’s data was the government’s final look at the first quarter GDP. It also included a separate report by the Commerce Department showing that May orders for large-ticket manufactured goods from U.S. plants rose for the 12th consecutive month.
Durable goods orders, which are meant to last for at least three years, increased 2.3% in May. This reverses a 0.8% decrease in April. This is despite a backlog supply chain and a shortage in workers.
According to the Commerce Department, orders for aircraft increased by 27.4% in May after rising 31.5% in April. Durable goods orders rose 0.3% in May, excluding transportation orders which can fluctuate from month to month.
Factories that anticipate a return of normalcy or better are increasing their operations to meet demand, as jobless claims continue lower.
Last week, the number of Americans applying to unemployment benefits fell as the market continues to recover. However, this recovery is slower than many economists anticipated.
According to the Labor Department, jobless claims dropped by just 7,000 from the week before, to 411,000. Although this is not the rush to work we have been anticipating for some time, weekly claims have declined steadily from around 900,000. in January.
Even though job growth is not up to most people’s expectations, Americans are still spending money as the summer heats up.
According to the Commerce Department, consumer spending, which accounts more than two-thirds the economy, increased at an impressive annual rate of 11.4% during the first three months of this year. Some of this spending may be fueled by the $1,400 payments made to individuals as part of the $1.9 trillion support package Congress approved in March.
The first quarter spending gains were a result of increases in goods, led by auto sales, as well as increased spending on services, including food services and travel accommodations. These are two areas that have benefited greatly from the reopening economy, which has been facilitated by the increase in vaccinations.
The rate of growth in business investment was strong at 11.7%, which is higher than the 10.8% estimate. Government spending grew at 5.7%, slightly lower than last month’s 5.8% estimate.
In the first quarter, the trade deficit increased by 1.5 percentage points. This was because a recovering U.S. economic attracted higher imports, while U.S. foreign exporters struggled to meet weaker overseas demand.