U.S. economic growth likely accelerated in the first quarter, fueled by massive government aid to households and businesses, charting the course for what is expected to be the strongest performance this year in nearly four decades.
The United States’ economy is rebounding more quickly compared to its global rivals, thanks to two additional rounds of COVID-19 relief money from Washington as well as easing anxiety over the pandemic, which has boosted domestic demand and allowed services businesses like restaurants and bars to reopen.
Though the anticipated pick-up in gross domestic product last quarter would leave output just below its level at the end of 2019, the economy remains at least a couple of years away from fully recovering from the pandemic recession, which started in February 2020.
The Commerce Department will publish its snapshot of first-quarter GDP growth on Thursday at 8:30 a.m EDT (1230 GMT).
“It will be a solid GDP number,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “It’s one small milestone in many that we have to hit before we can say we have fully recovered from the recession.”
The economy likely grew at a 6.1% annualized rate in the first three months of the year, according to a Reuters survey of economists. That would be the second-fastest GDP growth pace since the third quarter of 2003 and would follow a 4.3% rate in the fourth quarter.
The survey was, however, conducted before this week’s March durable goods orders, goods trade deficit as well as wholesale and retail inventories data. Economists at Goldman Sachs initially trimmed their GDP growth estimate by one-tenth of a percentage point to a 7.4% rate after the durable goods data.
They subsequently raised the estimate to a 7.7% pace after the goods trade deficit and inventory data.
Former President Donald Trump’s government provided nearly $3 trillion in relief money early in the pandemic, triggering record GDP growth in the third quarter of 2020. That was followed by nearly $900 billion in additional stimulus in late December. President Joe Biden’s administration offered another $1.9 trillion rescue package in March, which sent one-time $1,400 checks to qualified households and extended a $300 unemployment subsidy through early September.
The Federal Reserve on Wednesday acknowledged the burgeoning domestic activity, but the U.S. central bank gave no sign it was ready to reduce its extraordinary support for the recovery. read more
PENT-UP DEMAND
The rapidly accelerating economy could dampen enthusiasm among some moderate Democrats for Biden’s ambitious economic agenda. Biden on Wednesday unveiled a sweeping $1.8 trillion package for families and education in his first joint speech to Congress. Republicans oppose more stimulus, now worried about swelling debt. The new package and an earlier infrastructure and jobs plan total around…
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