Business News: US recovery from pandemic crisis shows momentum.
Driven by consumers and fueled by government support, the US economy is recovering remarkably quickly from the recession that swept the nation last year in the wake of the coronavirus and cost tens of millions of Americans jobs and businesses.
The economy grew at an annual rate of 6.4% in the last quarter, the government said Thursday, and expectations are that the current quarter will be even better. The number of people seeking unemployment assistance – a rough reflection of the number of layoffs – last week reached its lowest point since the pandemic broke out. And the National Association of Realtors said Thursday that more Americans signed home purchase contracts in March, indicating a strong housing market as summer approaches.
Economists say widespread vaccinations and declining virus cases, the reopening of more businesses, a huge infusion of federal aid, and a healthy increase in employment should help sustain steady growth. For 2021 as a whole, the economy is projected to grow by around 7%, which would represent the fastest growth in the calendar year since 1984.
on line sites who capitalized on purchases of goods during the pandemic – from From Amazon to Etsy to eBay: They are under pressure to show they can sustain accelerated growth even as consumers look more to services and less to goods. So far, Amazon, the dominant site by far, it’s just showing signs of slowing down. On Thursday, he reported that his first quarter profit more than tripled from a year ago, powered by online shopping.
The speed of the US economy’s rebound has been particularly surprising given the severity of the damage the pandemic has inflicted on it since last year. With business nearly closed, the economy contracted at a record annual pace of 31% in the April-June quarter of last year, only to recover sharply in the following months.
The Federal Reserve’s extremely low interest rate policy, designed to encourage borrowing and spending, also provided significant support. In fact, the economy is expected to expand so rapidly that some economists have raised concerns that it could trigger inflation. In part, this is due to the fact that increased demand has caused supply bottlenecks and shortages of some components, notably semiconductors, which are critical to the automotive, technology and medical device industries, including others.
At a press conference on Wednesday, however, President Jerome Powell reiterated his confidence that any increase in inflation would prove temporary. And he said the Fed wants to see a substantial and sustained recovery before considering withdrawing its economic support. Meanwhile, Powell clarified, the central bank is nowhere near initiating a pullback in its ultra-low rate policies.
As trade restrictions are lifted and more people venture out to shop and eat out, the businesses that serve them benefit. McDonald’s, for example, saw a sharp rise in revenue last quarter, even surpassing the same period in 2019, long before the pandemic flattened the economy. Likewise, most of the major tech companies have made impressive gains. TO Apple, for example, the request for iPhone and other corporate products increased profits to more than double in the January-March period.