An “annualized” rate is not the same as measuring one quarter to the next; annualizing assumes a quarterly rate would continue for a full year. Economists typically use the annualized rate for US GDP because it makes it easier to compare numbers over different periods of time.
PNC chief economist Gus Faucher expects GDP to grow past its pre-pandemic peak in the middle of this year. Faucher also believes that the stronger-than-usual growth rates will continue into 2022.
Businesses are reopening and trying to catch up with demand. For industries that require social interactions, including traveling and restaurants, the vaccine rollout is key. The combination of more vaccinated Americans and the rolling back of public health measures is crucial for the hospitality industry. In manufacturing, businesses are already struggling to meet demand, thanks to supply and shipping shortages.
After millions of Americans lost their jobs during the height of the pandemic, many have found work again. Together with stimulus checks from Washington, that has helped consumers be more confident about the future.
Meanwhile, workers who were fortunate enough to work throughout the pandemic saved a lot of money last year. With little to spend on outside the home, wallets stayed flush. This promises healthy consumer spending as the economy reopens.
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