The US economy came roaring back in the first quarter as Covid-19 lock downs eased thanks to President Trump’s vaccine program.
The economy scored a 6.4% gross domestic product growth for the first three months of the year on an annualized basis, meaning if the US continued on this pace it would see 25.6% for 2021, according to a Commerce Department report on Thursday.
“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.”
While some consumers spent their $1,400 stimulus checks on big ticket items such as home appliances and other durable goods, many others put the extra cash in the bank as the savings rate soared to 21%, from 13% in the previous quarter.
“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.
The latest employment numbers also shows that America is getting back to work. Since the start of the Covid-19 lock down more than 22 million American workers filed for unemployment benefits in 2020.
Since then about 14 million have returned to work. The Federal Reserve estimates that some 8.4 million fewer Americans 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.
While this is all good news for the US economy, many of the plans laid out by President Joe Biden on Wednesday could impede continued growth as his administration looks to strangle job creators with higher taxes.