Following a rough financial year in 2020, it forecasted that 2021 would be a far more secure and hopeful financial year for Americans. To review if this forecast is speculation or not, the financial reports from the end of the first fiscal quarter of this year must be analyzed. According to the United States Bureau of Economic Analysis, the gross domestic product has increased at an annual rate of 6.4% as of the first quarter of 2021. This is a comforting increase of 2.1% from the fourth quarter of 2020. Presumably, this increase reflects the economic recovery taking place as commerce has resumed since pandemic restrictions have eased. During this quarter, the United States Government continued to expand the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act, which means increased government assistance payments for households and businesses.
As of the first fiscal quarter of 2021, personal income has increased 21.1% monthly ($4.21 trillion), while consumer spending has risen only 4.2%. However, the United States monthly international trade deficit increased by $900 million between February and March due to imports outnumbering exports. The goods deficit also increased by $3.6 billion in March, while the services surplus decreased by $300 million in the same month. During March, S&P Global Economics remained optimistic about the American economic recovery accelerating in the following months. Their optimism was demonstrated in their decision to lower the projected risk of an American economic recession to 10% to 15% (10% lower than the previous projection). S&P GDP growth forecasts for 2021 and 2022 have risen 2.3% and 0.1%, respectively. The predicted inflation spike this year is presumed to be temporary. This optimism falters when it comes to the restoration of job opportunities in the upcoming years. S&P Global’s Economic Research Sector wrote, “despite the improved outlook, we see jobs as a lingering weak point in the recovery, with unemployment, adjusted for labor force composition, reaching its pre-crisis rate by the second half of 2023.” The lasting economic effects of the Covid-19 pandemic have yet to be seen, and there is still a high level of caution to be taken when making long-term predictions for the American economy. Although the United States economy is expected to recover dramatically this year, the U.S. is not free of risk just yet.
