Economy Bouncing Back
Economy is Bouncing Back
The U.S. economic recovery is accelerating
as stimulus money, Covid-19 vaccinations, and business re-openings spur a spring surge in consumer spending, a sharp pullback in layoffs, and a bounce-back in factory output.
Retail sales jumped 9.8% in March. The gain in consumer spending — the biggest driver of economic activity — came as the government began distributing hundreds of billions of dollars of stimulus funds to households.
The government also reported industrial production rebounded in March
after a decline in February. The economic readings taken together reflect people going back to work, people seeing more income, and people spending.
Nearly 200,000 fewer workers filed for initial unemployment benefits
as jobless claims fell to 576,000 last week from 769,000 a week earlier.
The U.S. housing market is 3.8 million single-family homes short
of the country’s demand, according to Freddie Mac.
Federal debt
— incurred when the government sells Treasury bonds, bills, notes, and other securities to help cover its costs — recently hit an all-time high. The U.S. budget deficit grew to a record $1.7 trillion in the first half of the fiscal year as a third round of stimulus payments sent federal spending soaring last month.
U.S. consumer prices rose sharply in March, marking the start of an expected inflation pressures.
Some of the price increases reflected temporary factors, but others showed how demand for many goods and services is reviving a year after the coronavirus pandemic shut down large swaths of the economy.
Traders welcomed exceptional manufacturing data, with a gauge of mid-Atlantic factory activity hitting its highest level in nearly five decades.
Important inflation data, consumer prices rose 0.6% in March, while core (ex-food and energy) prices rose 0.3%, both moderately above consensus expectations. Import prices rose 1.2%
in the month, also above forecasts.
Source: “The Madison Weekly Market Wrap”, April 18 2021.
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