Wrapping up a week of nearly unalloyed positive economic news:
Consumer confidence rose sharply for a second straight month, hitting the highest level since the pandemic began, as the rapid rollout of vaccines and another round of U.S. financial support for Americans boosts optimism.
The Conference Board reported Tuesday that its consumer confidence index advanced to a better-than-expected 121.7 in April, up from 109.0 in March. It was the strongest reading since the index stood at 132.6 in February 2020, right before the COVID-19 pandemic struck in the United States.
The accelerated rollout of COVID-19 vaccines, along with the Biden administration’s rescue aid policies, have brightened the outlook for the U.S. economy as it extends its recovery from the pandemic recession.
That is the view of a majority of business economists that emerges from a survey being released Monday by the National Association for Business Economics. The results, based on responses from 97 NABE members earlier this month, found that two-thirds say the vaccines and the administration’s policies have increased their optimism.
An equally large proportion say the vaccine rollout and a new presidential administration have had a positive effect on their companies’ sales and hiring, up from only 37% who said so in a survey done in January.
In addition, 35% of the economists say they think the economy will grow at a robust rate of at least 6% over the next year. Only 4% of the economists had predicted growth that strong in the January survey.
Real gross domestic product (GDP) increased at an annual rate of 6.4 percent in the first quarter of 2021 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2020, real GDP increased 4.3 percent.
Wages and benefits grew quickly for U.S. workers in the first three months of the year, a sign that businesses are starting to offer higher pay to fill newly-opened jobs.
U.S. workers’ total compensation rose 0.9% in the January-March quarter, the largest gain in more than 13 years, the Labor Department said Friday. That’s up from 0.7% in the final three months of last year. Still, the increase is just barely above 0.8% gains in two quarters in 2018.
The solid rise comes after weaker increases during the pandemic, when the unemployment rate initially shot to nearly 15% before declining steadily to 6% in March. As a result, workers’ pay and benefits rose just 2.6% in the year ending in March, down from 2.8% a year earlier.
The data comes from the Labor Department’s Employment Cost Index, which measures pay changes for workers that keep their jobs.
U.S. consumer spending rose at the fastest pace in nine months while incomes soared by a record amount in March, reflecting billions of dollars in government support payments aimed at putting the country firmly on the road to recovery.
Consumer spending rose 4.2% last month, the Commerce Department said Friday, the best showing since a 6.5% spending increase in June. Spending had fallen 1% in February as frigid winter weather disrupted sales.
Incomes surged by a record-breaking 21.1% in March after having fallen 7% in February. The big gain reflected delivery of billions of dollars in relief payments with individuals getting up to $1,400 payments from the $1.9 trillion support package President Joe Biden pushed through Congress last month.
The strong gains offer yet more evidence that the economy is poised for a rapid recovery following last year’s pandemic-triggered recession.
Here’s the BEA release on income and spending.
Personal income increased $4.21 trillion (21.1 percent) in March according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $4.18 trillion (23.6 percent) and personal consumption expenditures (PCE) increased $616.0 billion (4.2 percent).
Real DPI increased 23.0 percent in March and Real PCE increased 3.6 percent; goods increased 7.3 percent and services increased 1.7 percent (tables 5 and 7). The PCE price index increased 0.5 percent. Excluding food and energy, the PCE price index increased 0.4 percent (table 9).
In the week ending April 24, the advance figure for seasonally adjusted initial claims was 553,000, a decrease of 13,000 from the previous week’s revised level. The previous week’s level was revised up by 19,000 from 547,000 to 566,000. The 4-week moving average was 611,750, a decrease of 44,000 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week’s average was revised up by 4,750 from 651,000 to 655,750.
The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending April 17, unchanged from the previous week’s unrevised rate.
And down here in Washington.
During the week of April 18 – April 24, there were 11,629 initial regular unemployment claims (down 12.0 percent from the prior week) and 408,001 total claims for all unemployment benefit categories (down 1.5 percent from the prior week) filed by Washingtonians, according to the Employment Security Department (ESD).
- Initial regular claims applications are now 91 percent below weekly new claims applications during the same period last year during the pandemic.
- The 4-week moving average for initial claims remain elevated at 13,497 (as compared to the 4-week moving average of initial claims pre-pandemic of 6,071 initial claims) and remains at similar levels of initial claims filed during the Great Recession.
- Decreases in layoffs in Manufacturing and Educational Services contributed to the decrease in regular initial claims last week.
- Initial claims applications for regular benefits, Pandemic Emergency Unemployment Assistance (PEUC), Pandemic Unemployment Assistance (PUA) as well as continued claims for regular benefits all decreased over the week.
In all, a good week.