US: Economy Shows Progress as Recovery from pandemic Continues

The US economy continued to recover within the first three months of the year as businesses reopened and therefore the government spent heavily on Covid relief for citizens.

The economy grew at an annualized rate of 6.4% within the quarter, up from 4.3% within the final three months of 2020.

The US economy is rebounding faster than expected after contracting sharply in 2020.

But it’s several years far away from fully recovering from the pandemic recession.

Richard Flynn, UK director at financial services firm, Charles Schwab, said: “The US economy is accelerating quickly and remains on solid footing as we likely still enter a period of outstanding growth.

“We have experienced the sharpest economic ‘V’ in history – a deep recession and rapid recovery within five quarters.”

The strong growth was partly right down to easing anxiety over the pandemic as vaccines are unrolled across the US, boosting domestic demand and allowing businesses like restaurants and bars to reopen.

The Biden administration has also ushered through two additional rounds of Covid-19 relief money, the foremost recent of which saw unemployment subsidies extended and qualified households being sent one-off cheques for $1,400 (£1,003).

It has lifted confidence and helped consumer spending to hit a 14-month high in April. But there are questions over whether more moderate Democrats will still support President Biden’s ambitious economic agenda.

The US has spent about $6 trillion on Covid relief since last May, and Mr. Biden pitched some $4tn of latest stimulus spending in his first joint speech to Congress on Wednesday.

Republicans fiercely oppose more stimulus, worried about rising debt levels. There also are concerns the economy could overheat causing inflation to spike.

The US Federal Reserve System has played down such a risk, and its main politics committee kept its firing range for the benchmark rate of interest unchanged at between 0% and 0.25% on Wednesday, citing the necessity to continue supporting growth.

Fed Chairman Jerome Powell said there have been clear signs of progress within the economy but that the recovery is “uneven and much from complete”.

“The ongoing public health crisis continues to weigh down the economy, and risks to the economic outlook remain,” added the Federal Open Market Committee, which sets rates.

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