The US economy took off in the first quarter soaring 6.4% as rising vaccinations, a massive round of government stimulus and a steady recovery in the jobs market helped reverse some of the impact of the coronavirus pandemic.
The annualized rate, released by the Commerce Department on Thursday, suggests the US economy is firmly on the road to recovery. In normal times the US economy grows at about 2-2.5% a year but the pandemic triggered wild swings as the country went into lockdown and businesses shuttered.
A year ago US unemployment hit a post World War II high of 14.8%, it has since fallen to 6%. The economy suffered its worst quarterly retraction in history last year, shrinking 32.9% on an annualized basis. It grew at 4.3% in the last three months of 2020 after recording a remarkable annual growth rate of 33.4% in the previous three months.
Problems remain, the number of people filing for unemployment benefits each week is still close to three times as high as pre-pandemic levels and the jobs market is still down 8.4m jobs. But the fast rollout of vaccines, the reopening of businesses and the Biden administration’s $1.9bn stimulus bill have boosted consumer confidence and fueled an impressive recovery.
The US government sent cheques to 90 million Americans in March and consumer confidence is now approaching pre-pandemic levels having risen for four months in a row. Consumer spending accounts for two thirds of US economic activity.