The US economy is finally starting to see the right kinds of growth to suggest that the nation is turning the corner after the ravages of the Covid-19 pandemic. Last Thursday saw the US weekly jobless claims hitting their lowest number since before the pandemic began.
This gave the market extra confidence that saw futures rising as bank and energy stocks made remarkable gains. Plus with President Biden suggesting that there could be a brighter economic outlook, there are hopes that the US might bounce back from this once-in-a-lifetime trauma.
Last week saw the number of claims for unemployment dropping to 684,000. This was the lowest figure since the health crisis ran rampant across the US last spring. The figures have suggested that the labour market might be well on the way to recovery, and it defied several economists’ more sceptical expectations.
Much of this has been down to the dual factors of President Biden’s stimulus package and the roll-out of the vaccine. A massive $1.9 trillion was injected into the US economy through Biden’s plan. The efforts of sending cheques to households may have been simple, but it has helped boost consumer confidence after the dark days of winter.
Plus with the welcome news that more 130 million vaccine doses have been administered across the US, there is a growing sense that the pandemic may be controllable, rather than completely beaten.
Despite the optimism, the US job market still has some way to go before it looks anything close to normal. There are currently over 19 million US citizens who are currently on jobless benefits, and it will require plenty of economic reparation before things get better.
Record growth on the way?
The market initially reacted to the good news with a fair amount of caution, but the Federal Reserve was quick to upgrade its growth forecast for 2021 to 6.5%. This would mark the fastest period of growth since 1984 and it would surpass previous expectations of how the nation would recover.
The stimulus package has done much to boost consumer confidence and this is something that has been reflected by the boosting of several key stocks. The banking sector in particular enjoyed a strong bounce in premarket trading with banks like JP Morgan, Goldman Sachs and Wells Fargo all experiencing a boost of between 0.6% and 1.8%. Similarly, major oil and energy firms like Chevron and Exxon Mobile also enjoyed a good day on the market as crude oil prices gained by as much as 2%.
It remains to be seen whether the US economy can continue this run of good form. Much of this depends on how efficiently vaccines can be administered across the US and how well the vaccines will cope with several new strains of the disease that have appeared in countries like India and The Philippines. Despite the reservations, it’s evident that the US could finally be bouncing back.
