During the first quarter of 2021, the U.S. economy grew by 1.6% amid increased COVID-19 vaccinations and massive federal stimulus spending, according to The Washington Post.
The gross domestic product report released by the Bureau of Economic Analysis showed consumers are spending more on purchases such as cars and homes. Additionally, a record boost in household after-tax income suggests more consumer spending power in the future.
However, even when the economy officially reverses its pandemic losses, challenges will remain. Although the unemployment rate has fallen, about 8.4 million jobs lost during the pandemic have yet to return. The GDP report noted inflation is picking up—prices grew at a 3.5% annualized rate during the first quarter and are up 1.7% from a year earlier.
Economists expect inflation to rise this year as vaccines become more widespread and people spend more. However, there is uncertainty regarding how high it will climb and when the increase will trigger a response from the Federal Reserve or the White House.
