The long-awaited mini economic boom after a year marked by Covid-19 has started to show its effects in the United States, where nearly a quarter of the population is now vaccinated, and where prices have also started to rise. Unlike Europe, where an acceleration in inflation, with weaker growth, could lower living standards, inflation with growth – as should be the case across the Atlantic in 2021 (+6.4 % according to IMF forecasts), is buoyant.
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Inflation accelerates with wages
Inflation was indeed stronger than expected in March, at 0.6% compared to February according to the consumer price index (CPI), against 0.5% predicted by analysts. The increase is 2.6% compared to March 2020, when prices, under the effect of containment, fell: un higher since fall 2018. This inflation is combined with the increase in lan average hourly compensation of 1.5% between March 2020 and March 2021 (seasonally adjusted variation), depending on United States Department of Labor.
Consumption restarts
Furthermore, the United States announced on Thursday retail sales up sharply for March (+ 9.8%). The International Monetary Fund said this week that the world’s largest economy will take the lead this year with an accelerated vaccination campaign.
Americans consumed a lot in the past month: clothing, sporting goods, music, books, cars, but also food and drink. Which will support growth.
“The consumer boom is only just beginning,” predicted Gregory Daco and Lydia Boussour, economists for Oxford Economics.
Americans are now less reluctant to go shopping or dine out, and more and more states in the country have relaxed their restrictions. And after a year without vacations or bars, their savings were at an all-time high, and government checks to large numbers of households swelled their piggy banks even further.
“With new stimulus checks in hand, consumers have taken advantage of the warmer weather and rising vaccinations to splurge at auto dealerships, malls, restaurants, and home furnishings and home stores.”, detail Mr. Daco and Ms. Boussour.
Unemployment is falling
As a result of this economy which is starting to restart, jobless claims fell in the United States at the beginning of April, to their lowest level since the start of the crisis.
Last week, 576,000 people re-applied for the allowance, compared to 769,000 the previous week, according to data released Thursday by the Labor Department. However, this remains more than double the usual levels before the epidemic.
The number of unemployed is expected to continue to decline in the coming months as the economy continues to recover. In the New York area, for example, hiring intentions in the manufacturing industry soared in April to a level never seen before, with nearly half of the companies surveyed who plan to increase their workforce in the coming months, according to Fed data released Thursday.
Manufacturing activity in this region also increased sharply in April, reaching a high for several years, said the local branch of the Central Bank. Ditto in the Philadelphia area, where it hit a 50-year high, the Fed said Thursday.
“Activity has continued to grow in these two regions, at a higher speed. Manufacturing is approaching its pre-pandemic levels, driven by strong demand for goods, despite the effects of bottlenecks in the supply chain. supply “, underlines Rubeela Farooqi, economist for HFE.
Worldwide, suppliers are struggling to meet the strong demand, which is causing congestion in factories and ports. This drives up the prices of parts and raw materials, and that rise begins to trickle down to consumers.
Thus, in the New York region, prices paid by manufacturers to their suppliers are at their highest level since 2008, while delivery times are the longest on record.
The only downside is that this good news does not make the dollar more attractive. Currency traders would bet on the dollar if rates were higher, but the Fed has promised at every opportunity to keep monetary policy loose to support the recovery, even if inflation rises momentarily.
The contrast with Europe is growing
In the end, the situation contrasts with that of the countries of the euro zone where the third wave of Covid is slowing down the recovery, Germany for example GDP is expected to grow 3.7% in 2021, a weaker-than-expected recovery due to continued restrictions, according to forecasts from the main economic institutes released on Thursday.
On the vaccination side, the contrast is also obvious. While 37% of Americans have already received at least a first dose of vaccines, the European Union is struggling to reach 17%, according to data from Our World in Data as of April 14.
(With AFP)
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