WASHINGTON (AP) – The US economy grew at a robust annual rate of 6.4% in the first three months of this year, unchanged from the government’s initial estimate. The recovery from last year’s deep recession gathered pace earlier this year, aided by vaccines to fight the virus and trillions of dollars in government aid.
The rise in gross domestic product, the economy’s total output of goods and services, was the same as the government’s first glance a month ago, the Commerce Department reported on Thursday. Upward revisions in consumer spending, which accounts for two-thirds of economic activity, were offset by weaker export growth.
The economist believes GDP growth could exceed 10% in the current quarter from April to June.
“When given the opportunity to spend safely, consumers have the will and the desire to do so,” said Lydia Boussour, chief US economist for Oxford Economics.
Boussour said she expected GDP for the current April to June period to be around 13% and that quarter’s gains will allow the economy to recoup all production lost during the recession. . With the growth in the first quarter, GDP is only 0.9% below the level of the fourth quarter of 2019, before the end of the country’s longest economic expansion in the first quarter of 2020.
Many economists predict that the economy will grow between 6% and 7% this year, which would be the best performance since an increase of 7.2% in 1984, another year when the economy was recovering from a slump. deep recession. But Oxford Economics is forecasting growth this year of around 7.7%. This would be the largest annual gain since 1951.
The 6.4% performance in the first quarter represented an improvement after GDP growth slowed to a rate of 4.3% in the last three months of last year, a period when increasing cases coronavirus disease and declining government support have raised fears the country may fall back into recession.
But the passage of nearly $ 3 trillion in additional government support in December and March, along with the widespread introduction of vaccines, has allowed thousands of businesses to reopen and millions to return to work. .
Thursday’s report was the second of three government looks on first-quarter GDP performance.
It showed that consumer spending has grown at a staggering 11.3% annual rate, even better than the 10.7% estimate made a month ago. Business investment spending has also increased and residential construction, which has performed well over the past two years, has grown at an annual rate of 12.7%, better than the gain of 10.8% initially. valued.
However, these areas of stronger growth were offset by weak export sales to the United States, which fell at an annual rate of 2.9%, higher than the rate of decline of 1.1% reported there. a month ago.
As exports declined, imports increased with the US economy emerging from the pandemic recession faster than many other parts of the world.
With strong demand from US consumers, imports grew at an annual rate of 6.7% in the first quarter. The trade deficit, the gap between imports and exports, widened in the first quarter and subtracted 1.2 percentage points from overall growth.
Business inventories were also reduced in the first quarter as businesses were unable to meet growing demand. Lower inventories subtracted 2.788 percentage points from first quarter growth. However, that should translate into stronger growth in the second quarter as companies scramble to restock empty store shelves.