The U.S. economy advanced a robust 6.4% in the first three months of the year, the Commerce Department said Thursday, as consumers started spending again with the easing of coronavirus restrictions and the vaccinations of millions of Americans.
The recovery in the January-to-March period, on top of a 4.3% gain in the last three months of 2020, put the $21 trillion U.S. economy just slightly ahead of where it was in early 2020, before the pandemic swept into the country and ravaged its economy.
Economists are predicting continued gains for the world's biggest economy throughout 2021, fueled partly by government assistance to all but the wealthiest Americans and government spending to boost some hard-hit sectors of the economy.
Many businesses are starting to hire more workers and ramp up operations that had been curtailed by the pandemic that has killed 574,000 Americans, the most in any country.
With the hiring of more employees, the number of workers making initial claims for unemployment compensation has been falling in recent weeks. The Labor Department on Thursday said 553,000 jobless workers sought compensation last week, down 13,000 from the revised figure of a week before.
The new figure was the lowest since mid-March last year but still more than twice the 218,000-weekly average in 2019 before the pandemic began.
The country's central bank, the Federal Reserve, on Wednesday held its benchmark interest rate near zero and said it plans to continue supporting the economic recovery, even as it acknowledged that the U.S. economy is improving.
"Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened," the Fed said after a two-day policy meeting.
Fed Chairman Jerome Powell told reporters that the recovery has advanced "more quickly than generally expected," while adding that it "remains uneven and far from complete."
U.S. employers added 916,000 jobs in March and some economists are predicting that another 500,000 or more will be added each month throughout 2021.
There is reason for a continued favorable outlook.
With about 38% of U.S. adults now fully vaccinated, some people are spending again on gym memberships, restaurant dining and vacation travel they may have done without over the last year, which could lead to more hiring to accommodate customers. There has been a surge in retail sales and job openings.
Some state governors are revoking orders for people to wear face masks and allowing businesses to fully reopen or setting dates in coming weeks when they say businesses can ramp up.
Still, employers in many states continue to face directives to curtail operations and tens of thousands of new coronavirus cases are still being recorded every day even as millions of people are being vaccinated. Those arriving for dinner in a restaurant, sometimes for the first time in a year, still find many establishments cordoning off every other table to keep customers safely distanced from each other.
The employment picture in the U.S. has been boosted as money from President Joe Biden's $1.9 trillion coronavirus relief package filters through the economy. The measure could add to hiring and consumer spending, as millions of Americans, all but the highest wage earners, are now receiving $1,400 stimulus checks from the government or have already been sent the extra cash.
Biden has proposed an additional $4 trillion in government spending on infrastructure repairs and assistance for children and families, but the fate of the proposals in a politically divided Congress is uncertain.
About 2.7 million Americans are now being vaccinated against the virus each day, down from more than 3 million recently, with Biden saying that all adults who want a vaccination are now eligible to get one. It could take weeks, however, for many people to schedule their inoculation appointments and for the effect of the vaccinations to take hold.
More than 98 million American adults are fully inoculated with one of the three available vaccines, although millions of people remain skeptical of the vaccine for various reasons and say they will refuse to get inoculated.