As soon as it became clear how destructive the COVID-19 pandemic would be, the world was faced with a reality in which its citizens had to stare down both a public health disaster and an economic one.
After all, so many industries rely on the kind of foot traffic and international travel that was no longer possible in 2020. And even if you were lucky enough to work a job that didn’t feel the worst effects of the pandemic, the sheer number of those who weren’t made that fact abundantly clear.
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Just like with the virus itself, we’re not out of the woods when it comes to it economic effects yet. But recent months have shown some encouraging signs that the day when we are may not be as distant as it once seemed.
By the end of 2020, the United States saw a 4.3% growth in its gross domestic product.
According to Reuters , economists predicted that this number would climb up to 6.1% for the first quarter of 2021.
Not only would this be considered a solid GDP number, but it would account for the second-fastest growth rate since the third quarter of 2003.
That made the news all the more encouraging when — as CNN reported — the Department of Commerce recorded a 6.4% growth rate instead.
Part of the reason for this growth has been attributed to government stimulus packages seen throughout 2020 and in March of 2021.
As Reuters reported , the latest of these rounds of stimulus came in the form of a $1.9 trillion COVID-19 relief package that saw qualifying households receive one-time $1,400 checks.
This measure also extended a $300 unemployment subsidy through to early September.
However, the growth was also influenced by renewed consumer confidence brought on by America’s vaccine rollout that made the shots available to all adults.
According to Reuters, this has not only created conditions that allow bars and restaurants to reopen but also provided an avenue to unleash demand that has built up while Americans have accumulated about $2 trillion in “excess” savings.
Should growth continue as expected, the economy could fully recover by 2023 and growth for the remainder of the year could exceed 7%, which would account for the fastest GDP increase the nation has seen since 1984.
As Kevin Cummins — the chief U.S. economist at NatWest Markets — said, “Assuming vaccines remain effective against new variants of the virus, the economy should experience significant growth for the rest of the year.”
However, this growth hasn’t come without a potential cost and one existing cause for concern looms large over this progress.
As Reuters reported, some economists are concerned that the government funding we’ve seen in these stimulus efforts and an additional $1.8 trillion package President Biden announced on April 28 could spark inflation.
That said, many of their peers argue that this inflation will be temporary and remain while the American labor market trails at 8.4 million jobs below its peak in February of 2020.
And that speaks to a major marker indicating why recovery isn’t exactly imminent yet: Millions of Americans are still out of work.
According to CNN, data from the Department of Labor shows that 553,000 Americans applied for unemployment benefits within the last week alone.
While data obtained by Reuters shows that this is nowhere near as grim at the record 6.15 million claims observed during early April last year, numbers that indicate a healthy labor market generally fall within the range of 200,000 to 250,000.
Until employment numbers catch up with growth, the likelihood of that 2023 recovery point will seem more remote.
