https://www.wsj.com/articles/the-post-pandemic-boom-11619736069?mod=opinion_lead_pos1
President Biden can hardly be blamed for trumpeting the U.S. economic resurgence in his address to Congress. But his claim that “America’s house was on fire” when he entered office? It was already extinguished, as Thursday’s first-quarter GDP report showed.
Real GDP rose 6.4% in the period as vaccines rolled out, state lockdowns eased and Americans spent December stimulus payments. Incredibly, real GDP was a mere 0.87% below the 2019 fourth-quarter business cycle peak and probably would have surpassed it if not for supply-chain problems and disincentives to work. Consumer spending contributed 7.02 percentage-points to growth—about 70% of that for goods, but spending on services also increased, especially on recreation, food and accommodation.
Housing chipped in 0.49 percentage-points as the surge in home building and renovations continued. Business investment added 1.29 percentage-points, mostly from software and IT equipment, despite a global semiconductor shortage and transportation bottlenecks that have snarled manufacturing. Net exports and reduced inventories subtracted 3.51 points.
What’s amazing is that U.S. output is nearly what it was in the fourth-quarter of 2019 even with payrolls being about 5% smaller. Businesses and workers have become more productive during the pandemic. Aggregate employee compensation is 2.9% higher than in 2019’s fourth quarter as businesses have increased pay to reward and attract workers. Total personal income in the first quarter was up a whopping 16.7% from the pre-Covid peak. Much of this is pent-up savings—the personal savings rate was a near record 21%—that will turn into more consumer spending as people resume travel and leisure activities.
Mr. Biden wants to take credit for rescuing an economy in flames, but Democrats in Washington have been dousing dead embers. The economy was poised to accelerate as vaccines rolled out no matter who was President.