U.S. economy may show strongest surge since 1984 this year
The U.S. economy has been recovering from the pandemic rapidly in the first three months of 2021. Some analysts expect new reports to show the strongest annual growth in almost four decades.
The Commerce Department announced that the economy soared at an annual rate of 6.4% between January and March. Millions of Americans already got vaccines against COVID-19. Meanwhile, the federal government continues spending trillions of dollars to counteract the effects of the pandemic crisis.
Nela Richardson, the chief economist at the payroll processing company ADP, noted that the $1,400 paychecks that hit citizens mailboxes in March made a great difference. The vaccinations are also picking pace thanks to a nationwide campaign. More than 140 million U.S. citizens have received at least one shot thus far.
Richardson thinks both of those facts made a huge impact on confidence in the economy. Businesses are starting to reopen with more people inoculated against the disease.
What about Europe?
In Eurozone, vaccine rollout has been much slower than in the U.S., while restrictions on business were more severe. Analysts expect Europe to announce an economic contraction for the first three months of 2021.
Diane Swonk, the chief economist at Grant Thornton, stated that the course of the coronavirus determines the economy’s course. The U.S. economy contracted by 2.5% last year due to the pandemic, but economists expect a strong rebound this year. She added that we might see the strongest year in 2021 since 1984.
However, factories and transportation networks struggle due to soaring demand, reporting shortages of steel, lumber, and computer chips.
The Federal Reserve announced that inflation might be somewhat higher this year. Still, the agency insists it isn’t worrying about prices spiraling out of control.
On Wednesday, Fed Chairman Jerome Powell noted that it’s possible to see some upward pressure on prices during this time of reopening, adding that those pressures are likely to be temporary.
