U.S. Economy and Renewed Chance for Growth

Hope for pre-pandemic life sparks alongside the mass vaccination in the U.S. With more stimulus checks arriving, Americans have begun spending again, allowing for the increasing employment.

A question posed in the U.S. is whether this fast economic growth will free the nation from low-growth for most of the past 20 years or ignite inflation rates that have not been seen since the 1970s, according to The Washington Post.

Putting it into numbers, over the past 20 years, the U.S. economy grew at an average annual rate of 1.9% and well below 3.5% between 1980 and 2000. In contrast, the U.S. economy this year is expected to expand at an annual rate of 7% after the coronavirus recession last year. 

After the second $1.9 trillion coronavirus relief package, the Biden administration wants to allocate $3.7 trillion in federal funding for an infrastructure package.

The Federal Reserve vows to hold interest rates close to zero in order to make it effortless for consumers and businesses to borrow money and loans, according to The Washington Post.

Before the round of $1,400 stimulus checks in March 2021, Americans were spending their $600 checks in January on items such as furniture, electronics, clothing, and shoes. The U.S. reported a record of $221 billion spent on consumer goods.

The Labor Department reported a 916,000 job increase in March 2021, bringing the overall unemployment rate down to 6%, a post-recession low, according to The Washington Post.

Despite all the gains, however, 8 million Americans that were working during 2020 are now unemployed. In addition, another 4 million Americans have completely quit the labor market. Anticipation and expectation for strong economic growth also leads to long-term interest rates calling investors to pull out money from emerging markets to earn higher returns in the U.S. 

Article by Margaret Georgiev of Walter Johnson High School

Photo by Anna Lee of Richard Montgomery High School