The US economy surged 6.4 percent in the first quarter of the year as the US recovery from the COVID-19 pandemic picked up speed, driven by government spending and mass vaccinations.
America’s gross domestic product — the value of all goods and services produced here — grew by 6.4 percent from January to March, the feds said Thursday. Economists polled by Dow Jones and The Wall Street Journal expected an annualized growth rate of 6.5 percent.
Outside of the third quarter of 2020 when the economy grew more than 30 percent, it was the best quarter for the GDP since 2003.
Also Thursday, the Labor Department is expected to report the number of first-time claims for jobless benefits last week. Economists polled by Dow Jones expect that number to be 528,000.
The data come after the US posted strong growth of 4.3 percent in the fourth quarter of 2020. That growth, however, stalled toward the end of the year as daily new COVID-19 infections and deaths climbed to record levels, prompting fresh restrictions in some parts of the country and yet again shuttering businesses.
In the full year 2020, the US GDP shrank 3.5 percent, the largest decline since 1946 when the U.S. demobilized after World War II. That staggering decline has set the country up to accelerate growth in 2021, many economists predicted before the new GDP numbers were published.
Powering the current growth of the GDP is continually declining cases of the virus and a widely successful rollout of the vaccines. About 43 percent of all Americans have received at least one dose as of Wednesday, according to the Centers for Disease Control and Prevention.
The markets are in the midst of the busiest earnings week of the quarter and several companies have flashed causes for optimism. Apple and Facebook both reported blow-out quarters on Wednesday evening, with striking revenue growth that helped lift the markets. And McDonald’s on Thursday announced that its revenue topped pre-pandemic levels, another indicator of a strong US recovery to start the year. Investors will be watching for more clues as Amazon and others report earnings later Thursday.
Earlier this week, the Federal Reserve held interest rates and its massive bond-buying program that’s fueled much of the US growth steady, giving no sign that it’s prepared to reduce its support for the recovery. The central bank acknowledged the better economic outlook, despite declining to ease support measures, which critics say companies are becoming overly reliant upon.
And on Wednesday, President Joe Biden his $1.8 trillion plan for families, children and students and pushed for his $2 trillion infrastructure overhaul. With both initiatives, Biden is hoping to sustain economic growth past the recovery from the pandemic lows, but critics say he will rack up an unsustainable level of US debt.