One theme that stood out from the Fed’s meeting last week and Fed Chief Powell’s press conference which followed the meeting—the Fed is in no mood to talk about raising interest rates.
Last week the president signed the American Rescue Plan, which pumps another $1.9 trillion into the economy. That’s on top of the $900 billion passed in December and the $2.2 trillion CARES Act in March 2020.
One year ago, the World Health Organization declared the Covid outbreak a pandemic. Americans were beginning to stock up on staples, strict lockdowns were in the pipeline, and the economy and the stock market were in a tailspin.
Hiring accelerated last month as restaurants and other firms in the leisure and hospitality industry reopened amid a drop in daily Covid cases.
The U.S. Bureau of Labor Statistics reported that nonfarm payrolls jumped by 379,000 in February, almost double the consensus of 200,000 offered by Bloomberg News. Once again, the wide miss highlights the difficulty of economic forecasting in today’s environment. The jobless rate fell to 6.2% in March from 6.3% in February.
The economy is off to a strong start in 2021. According to a closely followed GDP tracking model, GDP is tracking at a 10.0% annualized pace, per the Atlanta Federal Reserve (as of March 1).
The High Frequency GDP Model from Moody’s Analytics places growth at 9.0% as of February 26.
- Both models track data in real time. February’s unusually cold weather could temporarily dent economic growth.
Both are well above Moody’s survey of economists, which is forecasting 4.2% growth, and the Blue Chip Consensus, which is forecasting 3.0%.
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