Thanksgiving Looks Expensive This Year — But US Economy Doing Well
With the US economy steadily recovering from the pandemic, Americans have some things to be thankful for. The US Bureau of Economic Analysis on Wednesday released two reasonably positive reports on the nation’s economic outlook. The first was its quarterly report on Gross Domestic Products (GDP) and Corporate Profits. The second highlighted Personal income and outlays for October 2021.
GDP highlights for Q3 2021
The GDP report shows a 2.1% annual growth rate in Q3, following the 6.1% recorded in Q2. This was slightly higher than the initially projected 2% for that period. The data shows a slight bump to an otherwise rapidly recovering economy.
A decline in consumer expenditure drove a Q3 drop in real GDP businesses across the country. The resurgence of COVID-19 cases has resulted in various limitations and delays in reopening companies in several regions. In addition to this government aid payments— forgiven loans to firms, subsidies to state and local governments, and social benefits to households— also declined in Q3.
The report also indicates that real disposable personal income declined by 4% in Q3, following a 29.1% fall in Q2, showing an improvement. Corporate profits continued to increase after a solid Q2 performance. Profits increased 4.3% following a 10.5% rise in the second quarter.
The improving economic situation, in combination with declining unemployment rates, bodes well for the US economy at Thanksgiving.
More Positive Economic Indicators
The number of unemployment claims filed fell to a 52 year low last week. However, the Labor Department reported that the drop in these claims was exacerbated by the difficulty in adjusting statistics this time of the year. Still, the labor market continues to tighten, with the unemployment rate falling to its lowest since March 2020.
Steady employment growth continues as many businesses push to widen the existing gap of over 10 million open jobs. However, as coronavirus vaccines become more widely available, more people are returning to work, with the monthly number of new hires surpassing 500,000 this year.
A report from the personal income and outlays for October 2021 also pointed to an increase in household expenditure. Consumer spending, which accounts for over two-thirds of economic activities in the US, increased by 1.3% in October. This growth followed a 0.6% increase in September. Furthermore, consumers were bolstered by rising salaries and larger savings, allowing them to purchase automobiles and travel.
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An Expensive Thanksgiving
Despite an improving economic situation, rising inflation rates have increased the prices of goods in the US. Currently, when compared with 2020 prices, thanksgiving food prices show a significant rise.
The Biden administration is making concerted efforts to curb inflation, currently causing a fall in the value of the USD by 1% every 30 days. Federal Reserve Chair, Jerome Powell, has been reappointed to continue at the helm of the world’s most powerful central bank. He was mandated to help wean the US economy off emergency support, despite high inflation and substantial job gains, which could threaten US recovery.
Federal officials have agreed to reduce their $120 billion in monthly purchases of Treasuries and mortgage-backed securities. Tapering is expected to help reduce inflation rates, with bond purchasing stopping completely in June 2022. This timeline will mean that Americans will likely experience the most expensive thanksgiving in a long time this year.
How soon do you think the US economy will recover to pre Covid-19 levels? Let us know in the comments below.