Consumers shook off the pandemic blues as 2021 began, putting stimulus checks to work buying cars and other goods and helping set the stage for what could be the fastest economic growth in decades.
The initial reading on the country’s first-quarter economic performance, delivered Thursday by the Commerce Department, showed that much remained far from normal. Even with a big jump in personal income, there was only a modest increase in spending on services like travel, dining and even health care.
But economists say that is already changing as more vaccinations are delivered and coronavirus-related business restrictions are eased. With better weather, savings accumulated during a long year of lockdowns, and an itch to make up for forced inactivity, Americans will have plenty of reasons to go out and spend.
“Consumers are now back in the driver’s seat when it comes to economic activity, and that’s the way we like it,” said Gregory Daco, chief U.S. economist at Oxford Economics. “A consumer that is feeling confident about the outlook will generally spend more freely.”
the first-quarter growth rate was 6.4 percent.
profit more than tripled last quarter to over $8 billion, while sales jumped 44 percent to $108.5 billion.
One striking aspect of the quarter’s economic activity was spending on motor vehicles and parts, which increased by almost 13 percent from the previous three months. Strong consumer demand and tight inventories drove prices higher.
Low interest rates, readily available credit, rising home values and stock prices, and strong trade-in values for used models are also easing the path for consumers.
At AutoNation, the country’s largest dealership chain, many vehicles are being sold near or at sticker price even before they arrive from the factory. “These vehicles are coming in and going right out,” said Mike Jackson, the chief executive.
Even if economic output is back to where it was before last year, as Mr. Daco estimates, it is short of where it would be without the pandemic. What’s more, economists say it is likely to take until sometime next year for employment to regain the ground it lost as a result of the pandemic.