Fri | Jan 21, 2022

US recovery from pandemic recession showing momentum

Published:Thursday | April 29, 2021 | 11:37 AM
A member of the wait staff delivers food to outdoor diners along the sidewalk at the Mediterranean Deli restaurant in Chapel Hill, North Carolina on Friday, April 16, 2021 - AP

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.

The economy grew last quarter at a vigorous 6.4 per cent annual rate, the government said Thursday, and expectations are that the current quarter will be even better.

The number of people seeking unemployment aid — a rough reflection of layoffs — last week reached its lowest point since the pandemic struck.

And the National Association of Realtors said Thursday that more Americans signed contracts to buy homes in March, reflecting a strong housing market as summer approaches.

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 per cent, which would mark the fastest calendar-year growth since 1984.

The gains have become increasingly evident in recent weeks.

In March, U.S. employers added 916,000 jobs — the biggest burst of hiring since August.

At the same time, retail spending has surged, manufacturing output is up and consumer confidence has reached its highest point since the pandemic began.

“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 remain abundant and we are starting to see rebounding employment.”

The speed of the rebounding economy has been particularly striking given the scope of damage the pandemic inflicted on it beginning in March of last year.

With businesses all but shut down, the economy contracted at a record annual pace of 31 per cent in the April-June quarter of last year before rebounding sharply in the subsequent months.

For all the economy's gains, it still has a long way to go.

More than 8 million jobs remain lost to the pandemic.

And while most college-educated and white collar employees have been able to work from home, job cuts have fallen disproportionately on low-wage workers, racial minorities and people without college educations.

In addition, many women, especially working mothers, have had to leave the workforce to care for children.

In its report Thursday, the government said the nation's gross domestic product — its total output of goods and services — accelerated in the January-March quarter from a 4.3 per cent annual gain in the last quarter of 2020.

It was the first of three estimates of growth last quarter; the government will revise the figure twice in coming weeks.

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

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