U.S. GDP increased by 6.4% for the first three months

The economic activity started expanding from the beginning of 2021. Remarkably, widespread vaccinations, as well as more fuel from government spending, helped the U.S. economy to recover. The country is recovering sharply and is getting closer to where it was before the coronavirus pandemic hit.

Gross Domestic Product increased by 6.4% for the first three months of 2021. Outside of the reopening-fueled third-quarter increase in 2020r, it was the best period for GDP since the third quarter of 2003.

According to Mark Zandi, chief economist at Moody’s Analytics, the American consumer is powering the train, and businesses invest heavily.

The increase in GDP came across various areas, including improved personal consumption, fixed residential and nonresidential investment, and government spending.

Another essential thing to mention is that consumers, who account for 68.2% of the economy, stimulated spending by 10.7% in the quarter. Remarkably, in the previous period, an increase was 2.3%. The expenditures were focused on goods, which rose 23.6%. Moreover, spending on services also boosted by 4.6%.

Government expenditures and investment rose 6.3%

On the goods side, spending increased by 41.4% on durable goods like appliances and other long-lasting purchases. Remarkably, the savings rate gained to 21%, from 13% in fourth quarter of the year.

Imports also continued rising, boosting 5.7%, while exports decreased by 1.1%. Imports subtract from GDP.

Moreover, Government expenditures and investment rose 6.3%, including a 13.9% increase at the federal level and a 1.7% boost from state and local entities.

Moreover, inventories decreased sharply, having 2.64 percentage points off the top-line GDP gain. Still, that slump in the first quarter likely will only increase overall growth numbers later.

According to Mark Zandi, chief economist at Moody’s Analytics, the only real drag on the economy will continue to be trade because the U.S. is way out ahead on the rebound than anywhere else in the world.