WASHINGTON (Pakistan Point News / Sputnik - 27th May, 2021) US Gross Domestic Product likely expanded by 6.4 percent in the first quarter of 2021, the Commerce Department said Thursday in its second estimate of January-March growth as the economy made a strident recovery from the coronavirus pandemic.
"Real gross domestic product (GDP) increased at an annual rate of 6.4 percent in the first quarter of 2021, reflecting the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic," the department said in a statement. "The increase was the same rate as the 'advance' estimate released in April."
The GDP expansion was enabled partly by government assistance payments to individuals, expanded unemployment benefits and Paycheck Protection Program loans distributed to businesses through the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act, the statement added.
The Commerce Department issues three GDP readings for each quarter, with Thursday's being its second estimate for the January-March period.
For the fourth quarter of 2020, GDP grew by 4.3 percent, the department said in its final reading issued on March 25.
While the Q4 GDP for last year was positive, the economy still shrank 3.5 percent for all of 2020 due to COVID-19 related lockdowns. One main reason was that some 8 million or more jobs lost at the height of the pandemic have not returned, officials said.
The first quarter estimate released Thursday came in slightly lower than the 6.5 percent forecasts by economists polled by US media.
"With the drop in inventories and the poor performance of trade possibly reversing later in the year, there will be a consistent tailwind for GDP for a few quarters," economist Adam Button said in a comment posted on ForexLive.
The Federal Reserve has forecast a 6.5 percent GDP for all of 2021, although it says it does not expect "full employment" � defined by an unemployment rate of 4.0 percent or lower � to return before 2023. The unemployment rate stood at 6.1 percent at the end of April.
