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U.S. economic growth picked up momentum in the first three months of 2021 as a result of massive fiscal stimulus boosted consumer spending, as well as lighter blockade cuts after slowing new Covid-19 infections.
Gross domestic product rose 6.4 percent in the quarter, the Commerce Department said Thursday. This exceeded economists ’expectations for 6.1 percent growth, according to the Refinitiv survey.
Economic production was up 1.6 per cent on the previous quarter, based on the extent to which other major economies used it.
Growth accelerated as more Americans were vaccinated against coronavirus and states began to calm pandemic restrictions. The U.S. has administered 234.6 million doses to date, and 98 million Americans are fully vaccinated, representing 29.5% of the total population.
Consumers extremely worn out as goods and services reopen the economy, taking advantage of stimulus controls and stacks of savings. Personal consumption expenditure rose by 10.7 per cent year-on-year.
“I think we were surprised in the economic community that the economy is back fast in Q1,” said Oren Klachkin, an economist at Oxford Economics.
“Consumers boosted the economy in the last quarter, mainly due to the continued depletion of durable goods, but also a recovery in service spending. Reopening, rapid hiring hikes and very generous tax transfers boosted spending in the last quarter.”
The data comes after the US president Joe Biden said America was “ready to take off” as it raised economic recovery in a speech to Congress on Wednesday. After pushing its stimulus plan in March, Biden has turned its attention to the $ 2.3 million infrastructure spending bill.
Federal Reserve on Wednesday acknowledge progress in the economic recovery, but maintained that the path to the future would “depend on the direction of the virus”. Faith President Jay Powell said that “although the overall recovery has progressed faster than expected, it is different and far from over.”
In fact, despite the improvement, there is a long way to go to recover all the jobs lost since the pandemic began in the labor market. Powell said that on Wednesday a month the growth in stellar employment “was not enough.”
Another report from the labor market on Thursday showed that 553,000 Americans were claiming new unemployment benefits last week, near the lowest level since the pandemic began, but historically still high.
The Fed, which was in no hurry to eliminate its very simple monetary policy, predicted GDP growth of 6.5% and an unemployment rate of 4.5% this year. Growth in 2022 is expected to moderate to 3.3 percent.
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