Economy surges to start the year as GDP jumps 6.4% in the first quarter
Economic activity boomed to start 2021, as widespread vaccinations and more fuel from government spending helped get the U.S. closer to where it was before the Covid-19 pandemic struck.
Gross domestic product, the sum of all goods and services produced in the U.S. economy, jumped 6.4% for the first three months of the year on an annualized basis. Outside of the reopening-fueled third-quarter surge last year, it was the best period for GDP since the third quarter of 2003.
Economists surveyed by Dow Jones had been looking for a 6.5% increase. Q4 of 2020 accelerated at a 4.3% pace.
The boost in GDP came across a spectrum of areas, including increased personal consumption, fixed residential and nonresidential investment and government spending. Declines in inventories and exports as well as an increase in imports subtracted from the gain.
The latest numbers reflect an economy that has made major strides since the 2020 lockdown that sent more than 22 million American workers to the unemployment line and saw GDP plunge an unprecedented 31.4% in Q2 of 2020.
That was followed by a rebound of 33.4% in Q3. However, the Bureau of Economic Research still has not declared an end to the recession as GDP in total dollars has not passed its previous peak.
While about 14 million have returned to their jobs since then, the Federal Reserve estimates that some 8.4 million fewer hold jobs now than prior to the pandemic. The unemployment rate has tumbled from its high of 14.7% down to 6%, but that’s still well above the 3.5% in February 2020.
A separate report from the Labor Department showed that another 553,000 Americans filed first-time jobless claims last week. That marked another pandemic-era low but was above the Dow Jones estimate of 528,000.
The struggles in the jobs market continue to fuel accommodative monetary policy.
The Fed on Wednesday noted that “indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak.”
Fed Chairman Jerome Powell said that while housing activity is above where it had been and other parts have recovered close to pre-pandemic levels, the recovery remains “uneven and far from complete.”
The rebound also is reflective of previously unheard of levels of policy stimulus both from the Fed and Congress.
On the fiscal side, Congress has allocated some $5.3 trillion towards enhanced unemployment compensation along with a variety of other spending programs that helped push the federal budget deficit to $1.7 trillion in the first half of fiscal 2021 and has sent the national debt soaring to $28.1 trillion. Congress also is considering a $1.8 trillion infrastructure plan from the White House.
The Fed also has come through, cutting its benchmark short-term borrowing rate to near zero and buying nearly $4 trillion worth of bonds, pushing its balance sheet to just shy of $8 trillion.
This is breaking news. Please check back here for updates.
Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign up to start a free trial today.
- Avalanche lock up No. 1 overall seed for playoffs
- Doctors’ union in Japan calls on government to cancel Tokyo Games
- Shoephoria! exhibition to open at Fashion Museum in Bath
- Colombian protest leader Lucas Villa, who was shot eight times, dies
- Australia’s Never-Ending Travel Ban
- As US pulls out of Afghanistan, China sees opportunities — and potential for chaos
- Blake Griffin debuts “McLovin”-themed Air Jordans
- ESPN extends deal to air MLB games through ’28
- Brazil braces for renewed Covid surge as Bolsonaro faces parliamentary inquiry over pandemic response
- ‘No roadmap’: New Zealand mulls reopening options after a year of closed borders
Common Symptoms Of COVID-19
The CDC has a collection of nine Roche antibody assays designed to provide rapid results from COVID-19 rapid antigen test. If you are a potential carrier of the human papilloma virus (HPV) and are looking for HPV testing kits for the home, it is important…
Things You Never Knew About The Best Water Purifier
Things You Never Knew About The Best Water Purifier: We all know the importance of having a water purifier at home, but not many people know the things they need to know before buying one. Most of the time, we miss out on the most…
Med hub smart pill, a device for patients having medicines intake in the daily schedule.
Med hub smart pill: The drug prescribed by a doctor will be effective if it would be taken at the right time suggested by the doctor because it is necessary for our healing process. When a patient takes too many medicians in a day also…
10 Best Effective Plants to Fight Pollution – Diwali Edition
Effective Plants to Fight Pollution: Few more months and the most awaited festival of the year will be here. We Indians love our festivals, and the biggest festival of India, especially north India, is Diwali. It is a massive affair here. It generally falls in…