The Economy in Charts as Biden Takes Helm of Uneven Recovery
Joe Biden assumes the helm of the world’s largest economy and faces an uneven recovery -- steady in some areas like housing and manufacturing but rough in others, most notably the job market.
In the week prior to his inauguration Wednesday as the 46th U.S. president, Biden vowed to push for more aid once in the White House, unveiling an initial economic recovery plan with a $1.9 trillion price tag.
Janet Yellen, Biden’s pick for Treasury Secretary and a former Federal Reserve chair, backed that proposal at her Tuesday confirmation hearing -- urging lawmakers to “act big” in efforts to rescue an economy battered by the coronavirus.
The financial system regained its footing swiftly last year after the federal government doled out trillions in fiscal support and the Fed cut interest rates. While some areas such as residential real estate and manufacturing continue to improve, the pace of hiring has slowed and a summertime burst of consumer spending dissipated as the year drew to a close.
The following six charts help depict the degrees of progress in various sectors since the pandemic upended the economy nearly a year ago and as the nation continues to get vaccinated.
The economy snapped back quickly in the third quarter, posting its fastest annualized pace of growth in records going back to the 1940s. Still, economists project more tempered growth when fourth quarter data is released.
A slowdown in household spending, which accounts for about two-thirds of gross domestic product, explains most of that moderation.
When Americans headed to the polls in November, the government’s retail sales data painted a bright picture of demand from May through September. While the value of retail receipts remains above the pre-pandemic level, purchases have declined in each of last three months.
Job growth helped bolster household consumption for several months. But employment gains aren’t coming fast enough and the pandemic is worsening, helping explain the urgency among some in Washington to keep the fiscal-aid spigot open.
Employment plunged by more than 22 million in March and April combined. While payrolls have since increased by some 12.3 million, industries such as accommodation, food services and entertainment -- those most impacted by the virus and subsequent restrictions -- remain severely depressed.
Meanwhile, other parts of the economy have been sailing along.
A drop in mortgage rates to record lows, coupled with a desire for bigger spaces as more Americans worked from home, ignited a housing boom. In October, combined purchases of new and previously owned homes were at highs not seen since the spring of 2006.
The red-hot demand has come at a cost. Asking prices have soared, reducing affordability, because inventory levels have plunged. Still, elevated sales are expected to continue fueling more construction projects.
Inventory of merchandise and equipment also is depressed, which translates into good news for U.S. factories.
Manufacturing has gathered steam since the early days of the pandemic. Fed data show the longest string of gains in factory output since 1997-1998, and inventory-sales ratios indicate there’s impetus for more production.
Ultra-low borrowing costs have also encouraged companies to invest in their operations.
Business investment in equipment such as communications gear, machinery and computers registered a notable pickup in the third quarter. By October, the value of core capital goods shipments and orders hit their highest in records dating back to 1968.