As the United States starts to gradually crawl out of the economic cratering from 2020, many expected today’s report on the gross domestic product to be encouraging. The question, of course, was how encouraging it might be.
Now we know. CNBC reported this morning:
Economic activity boomed to start 2021, as widespread vaccinations and more fuel from government spending helped get the U.S. closer to where it was before the Covid-19 pandemic struck. Gross domestic product, the sum of all goods and services produced in the U.S. economy, jumped 6.4% for the first three months of the year on an annualized basis.
“We’re running on all cylinders in terms of economic activity,” Scott Anderson, chief economist at Bank of the West in San Francisco, told the New York Times. “People are anxious to get out and return to their normal lives, and there’s pent-up demand…. It doesn’t hurt that the stock market is at a record high and the housing market is strong.”
I can appreciate the fact that a number like 6.4%, in isolation, may not have much meaning for much of the public, but it’s evidence of robust economic growth. Indeed, Americans haven’t seen GDP growth this strong in the first quarter since 1984 — a period Ronald Reagan and his party liked to refer to as “Morning in America.”
A Washington Post report added that, at this pace, the domestic GDP will have recovered from its COVID-related losses “by the middle of this year, according to data released today by the Bureau of Economic Analysis.” (The job recovery will take longer.)
It was exactly one year ago today when Jared Kushner told a national television audience, “The hope is by July, the country is really rocking again.”
In a way, he was right — though Kushner clearly had the wrong July in mind.
Also this morning, the latest report from the Labor Department showed initial unemployment claims improving, for the third consecutive week, to the lowest level since the start of the pandemic.
Last month, as President Joe Biden signed the Democrats’ $1.9 trillion COVID relief package, Senate Minority Leader Mitch McConnell (R-Ky.) scrambled to set public expectations. “The American people are going to see an American comeback this year,” the GOP leader said, “but it won’t be because of this liberal bill.”
McConnell added, “We’re about to have a boom. And if we do have a boom, it will have absolutely nothing to do with this $1.9 trillion.”
It was foolish rhetoric for a variety of reasons, and as the economy picks up steam in response to the American Relief Plan, McConnell’s efforts to deny Democrats credit suddenly looks a little worse.
Postscript: It’s worth clarifying that today’s 6.4% quarterly figure refers to growth at an annualized rate, which is the standard way of reporting the data. In other words, if we saw 12 months of economic activity like what we saw in the fourth quarter, the economy would grow by roughly 6.4%.
You may also see some focus today on a different figure: 1.6%, which reflects the change between the fourth quarter of last year and the first quarter of this year.
