The economy just experienced the second-largest quarterly growth IN 18 years as vaccinations continue and consumers begin to spend more.
U.S. gross domestic product grew at a 6.4% annual rate in the first quarter of 2021, the Bureau of Economic Analysis announced on Thursday morning. The growth was a bit short of expectations but shows that economic growth is moving in the right direction.
"Prospects for growth in 2021 have brightened on vaccine progress that is allowing restrictions to be lifted and a more complete reopening of the economy," said Rubeela Farooqi, chief U.S. economist with High Frequency Economics.
Last year’s fiscal year saw the two biggest swings in U.S. GDP history. The second quarter of 2020 (April 1 through June 30) experienced a colossal 31.4% plunge into the red, although the drop boomeranged back in the third quarter to the largest GDP increase in U.S. history, a 33.4% rise.
Thursday’s new numbers are bolstered by two rounds of stimulus checks. The first were $600 payments that were approved by President Donald Trump in December, and the most recent were $1,400 checks that were disbursed as part of President Joe Biden’s COVID-19 relief bill.
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The payments, coupled with savings accumulated over the course of the pandemic, helped infuse the economy with cash over the first quarter of 2021 as restrictions continue to be eased by state and local governments, and people feel more comfortable with venturing outside of their homes.
The Thursday report is not entirely surprising, as job reports from the past two months have been increasingly positive. The reports for both February and March exceeded the expectations of analysts and speak to the increasingly positive economic outlook projected by the Federal Reserve.
The Bureau of Labor Statistics reported that 916,000 new jobs were added in March while the unemployment rate sunk to 6%. The February jobs report found that 379,000 jobs were added that month, a figure well above the fewer than 200,000 figure that economic forecasters had predicted.
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"With a solid quarter now behind us, the U.S. economy is set to soar through the remainder of the year with the strongest growth seen since the early 1980s," said Bankrate’s senior economic analyst Mark Hamrick. "Growth in this current second quarter is expected to further accelerate as the economy opens up and long restrained spending on services picks up."
