The economy of the United States of America expanded by 6.4 percent in the first quarter of 2021 to slightly below the pre-pandemic level, according to the latest data from the Commerce Department on Thursday.
Speaking on the strong recovery recorded in the world’s largest economy, Gargi Rao, Economic Research Analyst at GlobalData, a leading data and analytics company, said “With a total COVID-19 support package of around 37.25% of US GDP, including Biden’s $1.9 trillion America rescue plan, GlobalData expects faster economic recovery for the US in H2 2021. The consistent progress noted in key macroeconomic factors such as business and consumer confidence and the purchasing manager’s index has caused GlobalData to revise its 2021 economic growth forecast for the US from 3.96% in January to 6% in April 2021.
“The US’s Q1 GDP growth was aided by rapid vaccinations across states, an increase in social consumption, a rise in non-residential fixed investment and a surge in global demand for goods and services. A total 6% growth could be achieved if the country continues its focus on job-oriented policies, consumer spending increases, there is continued pick up in home sales and business expectations increase.
“So far, unemployment benefits, stimulus support and pensions have resulted in an increase in household savings. Plus, the continued resumption of economic activities resulted in better labour market outcomes in March 2021. Further, the business confidence index shows an upward trend from January 2021 onwards, and a balanced economic recovery is expected in H2 2021 due to growth in the services sector, a spur in household consumption growth and increase in imports.
“Amid rapid vaccination and fiscal support from state and local governments, core macroeconomic indicators have strengthened. However, the path to steady recovery depends upon the development of virus variants and progress on vaccinations. Although unemployment rate declined it is still on the higher side, which indicates jobs are restoring but at a slower pace. Moreover, a recent spike in inflation rate may still be transitory but poises immediate downside risk to economic recovery. Despite growth, uncertainty prevails.”