Economy Roaring Back

[BarryLaverty]

Thanks, President Biden! 

https://www.cnbc.com/2021/04/29/us-gdp-rose-6point4percent-in-the-first-quarter-vs-6point5percent-increase-expected.html

ECONOMY

Consumer-fueled economy pushes GDP to 6.4% first-quarter gain

PUBLISHED THU, APR 29 20218:31 AM EDTUPDATED 2 HOURS AGO

 

Jeff Cox@JEFF.COX.7528@JEFFCOXCNBCCOM

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KEY POINTS

• First-quarter GDP for 2021 increased at a 6.4% rate, just below the Dow Jones estimate.
• It marked the second-fastest pace for growth since the second quarter of 2003 and was exceeded only by the reopening-fueled burst of Q3 in 2020.
• Initial jobless claims fell to a fresh pandemic-era low but were higher than expected.

WATCH NOW

VIDEO02:55

U.S. GDP jumped 6.4% in the first quarter, vs 6.5% increase expected

 

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, the Commerce Department reported Thursday.

Gross domestic product, the sum of all goods and services produced in the 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.

“This signals the economy is off and running and it will be a boom-like year,” said Mark Zandi chief economist at Moody’s Analytics. “Obviously, the American consumer is powering the train and businesses are investing strongly.”

In a separate report Thursday, the Labor Department said initial jobless claims fell to a pandemic-era low last week, but the number was higher than expected.

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.

Consumers, who account for 68.2% of the economy, accelerated spending by 10.7% in the quarter, compared with a 2.3% increase in the previous period. The expenditures were largely focused on goods, which increased 23.6%, but spending on services, which had been the missing link in the recovery, still grew by 4.6%.

 

On the goods side, spending exploded by 41.4% on durable goods like appliances and other long-lasting purchases.

Big consumer spending came thanks to another round of stimulus checks, this time for $1,400.

While the numbers indicated that many used the free money to spend, they also tucked a good portion of it away, as the savings rate soared to 21%, from 13% in Q4.

“With the elevated saving rate, households are still flush with cash and, now that restrictions are being eased as the vaccination program proves a success, that will allow them to boost spending on the worst-affected services, without needing to pull back too much on goods spending,” wrote Paul Ashworth, chief U.S. economist at Capital Economics.

Imports also continued to increase, rising 5.7%, while exports declined by 1.1%. Imports subtract from GDP.

Government expenditures and investment increased 6.3%, including a 13.9% rise at the federal level and a 1.7% gain from state and local entities.

Inventories declined sharply, shaving 2.64 percentage points off the top-line GDP gain, owing largely to spending in the U.S. outpacing much of the rest of the world. However, that slump in Q1 likely will only boost overall growth numbers later.

“The only real drag on the economy will continue to be trade, because the U.S. is way out ahead on the recovery than anywhere else in the world,” Zandi said. “We’re buying stuff and the rest of the world is still not quite there yet. Everything is firing on all cylinders, and we’re off and running.”

Still in recovery mode

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. Continuing claims, which run a week behind, nudged higher to 3.67 million, while the total receiving benefits through all programs fell by nearly 850,000 to 16.6 million.

 

 

 

 

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 toward 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.

[gamewatcher63]

Trump did a great job getting the economy jump started after the pandemic hit...Biden is Riden the coattails of that...

[DannyZuco]

You know Biden won't give credit where credit is due, besides he is nothing more than a puppet. 

He did a wonderful job getting us a vaccine for COVID--oh that's right, he didn't, that was the previous administration. 

Uncle Joe did a wonderful job with the border--oh no, my mistake again, that was the previous administration, but what do we have thanks to this idiot, another crisis, worse than the one they complained about with the previous administration. 

And he sure has helped the poor and middle class keeping those oil prices down--my bad, another thing that he hasn't done. Of course the middle class won't have to pay more in taxes--which is a lie--because we pay for it in the stores when prices go up, taxes go up. What use to be a dollar is now 2 dollars that is 8.25 cents more we have to pay in Texas. Thanks Uncle Joe the Puppet IDIOT. 

[BarryLaverty]

2 minutes ago, DannyZuco said:

You know Biden won't give credit where credit is due, besides he is nothing more than a puppet. 

He did a wonderful job getting us a vaccine for COVID--oh that's right, he didn't, that was the previous administration. 

Uncle Joe did a wonderful job with the border--oh no, my mistake again, that was the previous administration, but what do we have thanks to this idiot, another crisis, worse than the one they complained about with the previous administration. 

And he sure has helped the poor and middle class keeping those oil prices down--my bad, another thing that he hasn't done. Of course the middle class won't have to pay more in taxes--which is a lie--because we pay for it in the stores when prices go up, taxes go up. What use to be a dollar is now 2 dollars that is 8.25 cents more we have to pay in Texas. Thanks Uncle Joe the Puppet IDIOT. 

You sound more and more like a ranting old man shaking his fists at kids in his yard daily. You retiring this year? You sure sound like you need a good nap and some Geritol. 

[DannyZuco]

Just now, BarryLaverty said:

You sound more and more like a ranting old man shaking his fists at kids in his yard daily. You retiring this year? You sure sound like you need a good nap and some Geritol. 

Please, keep defending and deflecting from the different crisis that we have. Just like you, I will get more students with less money to teach next year--but it is NOT a crisis. 

BTW--on a different note--were any of those bad storms out near you last night. I hope not, a couple of those looked really bad on radar. By the time they got to us, it was just rain. Even if we don't agree--I don't want a tornado to take you out, unless it takes you to OZ--LOL. 

[DB2point0]

Operation Warp Speed is still working strong.  

[BarryLaverty]

3 minutes ago, DannyZuco said:

Please, keep defending and deflecting from the different crisis that we have. Just like you, I will get more students with less money to teach next year--but it is NOT a crisis. 

BTW--on a different note--were any of those bad storms out near you last night. I hope not, a couple of those looked really bad on radar. By the time they got to us, it was just rain. Even if we don't agree--I don't want a tornado to take you out, unless it takes you to OZ--LOL. 

Just big ol' thunder boomers and 6 inches of rain. No real wind or hail or anything other giant puddling going on. 

[DannyZuco]

5 minutes ago, BarryLaverty said:

Just big ol' thunder boomers and 6 inches of rain. No real wind or hail or anything other giant puddling going on. 

That's good, I only wish that much rain would come in July/August to refill my pond. I think we have another round tonight, then hopefully a nice weekend, but I haven't looked at the WAPP today, so who knows. I am just hoping it's nice enough to enjoy Canton Saturday. LOL. 

[DaveTV1]

The economy could be even better if Biden would remove the surplus unemployment checks.  A 6.4 percent increase is paltry compared to what it could be if more businesses could open up 100%.  Everywhere I go I see help wanted signs in windows.  Some businesses have shut down, because they can't find employees to man the jobs that need performed.  https://www.npr.org/2021/02/15/966376492/millions-are-out-of-a-job-yet-some-employers-wonder-why-cant-i-find-workers.  

https://www.facebook.com/docshotlink/  

https://www.houstonchronicle.com/business/article/Houston-restaurants-struggle-to-staff-up-covid-16048208.php  My company has offered a $200 bounty for employees, because don't have enough to be 100%.  

I also heard Washington and Oregon are going back on quarantine.  It's a little too early to be bragging about this, because it was inevitable.  Once Biden's tax plan hits us, then we'll see what Biden has done for the economy.  

[DannyZuco]

1 hour ago, DaveTV1 said:

The economy could be even better if Biden would remove the surplus unemployment checks.  A 6.4 percent increase is paltry compared to what it could be if more businesses could open up 100%.  Everywhere I go I see help wanted signs in windows.  Some businesses have shut down, because they can't find employees to man the jobs that need performed.  https://www.npr.org/2021/02/15/966376492/millions-are-out-of-a-job-yet-some-employers-wonder-why-cant-i-find-workers.  

https://www.facebook.com/docshotlink/  

https://www.houstonchronicle.com/business/article/Houston-restaurants-struggle-to-staff-up-covid-16048208.php  My company has offered a $200 bounty for employees, because don't have enough to be 100%.  

I also heard Washington and Oregon are going back on quarantine.  It's a little too early to be bragging about this, because it was inevitable.  Once Biden's tax plan hits us, then we'll see what Biden has done for the economy.  

As long as the national government continues to pay people more than they would make as part time workers, jobs won't be filled except by those that really want extra money. I can't get college students or part time workers because they get more than they can make with my program. Heck, if I could sit at the house and work for cash, and get enough money from the government to cover my cost of living--I'd be doing it also. But since they took away the $600 a week bonus, doesn't help me. LOL. 

[Crawford]

I suppose Trump had nothing to do with this.

Ain't it something how politicians and the mainstream media pick and choose what the new administration inherited and what they take credit for.

[Hagar]

Wow, look at that chart.  See how low it was prior to Covid.   Bet Biden never gets there.

[DaveTV1]

9 minutes ago, DannyZuco said:

As long as the national government continues to pay people more than they would make as part time workers, jobs won't be filled except by those that really want extra money. I can't get college students or part time workers because they get more than they can make with my program. Heck, if I could sit at the house and work for cash, and get enough money from the government to cover my cost of living--I'd be doing it also. But since they took away the $600 a week bonus, doesn't help me. LOL. 

Many have come back to work as part time workers, because they can still collect the added $300 bonus a week.  I went back to work as soon as I could, not just because I was waiting to see if my unemployment was approved, but I hated being stuck in the house all day.  I did do a lot of research and reading, but I didn't know where my next meal was going to come from.