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    Growth Is Strong, but the Obstacles to Full Recovery Are Big

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    The new G.D.P. numbers paint a vivid picture of a nation still struggling to complete an economic readjustment.A house under construction in Culver City, Calif., last fall. Despite great demand for housing, the sector actually contracted last quarter because of supply constraints.Chris Delmas/Agence France-Presse — Getty ImagesMost of the time, a 6.5 percent rate of economic growth would warrant celebrations in the streets. Only in the weird economy of 2021 can it be a bit of a disappointment.It’s not simply that forecasters had expected a G.D.P. growth number that was a couple of percentage points higher, though they did. And it’s not even that America’s output remains below its prepandemic growth path in inflation-adjusted terms, though it is.What makes the new G.D.P. numbers on Thursday feel less than buoyant is the degree to which they reflect a nation still struggling to complete a huge economic readjustment.The report offers some sunny signs, certainly. Growth for the first half of the year easily outpaced the rates mainstream forecasters envisioned late last year, and strong growth in business equipment investment bodes well for the future.But it is an uneven economy — bursting at the seams in some sectors, while still depressed in others. The new numbers show an economy with plenty of demand, but where supply constraints in certain sectors are binding, reducing the overall pace of growth beneath what ought to be possible.Consider the housing sector. The industry is in some ways experiencing a boom, with home prices (and increasingly, rents) rising fast. Yet in terms of the G.D.P. accounting, residential investment became a big negative in the second quarter, contracting at a 9.8 percent annual rate.If builders can’t get lumber, drywall, appliances and the like at prices to “pencil out,” or to make economic sense, they can’t build houses. And so despite extraordinary demand for houses, the sector actually subtracted half a percentage point from the overall G.D.P. growth rate.There was a similar 7 percent rate of contraction in investment in business structures, which probably reflects a mix of supply constraints and uncertain future demand for certain classes of commercial real estate like offices and hotels.Then there are inventories of goods, which subtracted 1.1 percentage points from the second-quarter growth rate. Economists tend to ignore swings in inventories, as they tend not to reveal much about the future direction of the economy. In this case, though, the inventory decline is telling. It is consistent with what businesses are saying about having to draw down inventories as they struggle to keep up with demand (think, for example, of auto sales lots with far fewer cars and trucks to choose from than usual).Meanwhile, the great readjustment in the economy that needs to happen between consumption of goods versus services — although it continued in the second quarter — still has a long way to go.Consider a hypothetical world where the pandemic had never happened, and instead the economy kept growing as forecasters in January 2020 had expected it would, with the various segments of G.D.P. retaining a steady share of the economic pie.Services consumption in the second quarter remained 7.4 percent below the level it would have maintained in that alternate universe, while spending on durable goods remained 34 percent higher.Those are extraordinary shifts in what the economy is being asked to produce, and it is hardly shocking that the physical goods side of the economy would be straining at capacity in light of such an epic reallocation of demand.What has happened in recent months is not Americans shifting spending away from physical goods and toward services, but rather buying more of both, however with varying growth rates. Spending on durable goods rose at a 9.9 percent rate in the second quarter after a 50 percent rise in the first quarter. Spending on services rose 12 percent in the second quarter.Those numbers are, in effect, driving the supply strains for many physical goods.Moreover, the second-quarter data predates the surge in virus cases from the Delta variant. We don’t know yet whether its spread will affect the economy in any meaningful way, but if it does, the likely effects include making supply strains of physical goods worse and slowing the rebalancing of the economy toward services.It would be unrealistic to expect the economic trauma of 2020 to be fixed in just a few quarters, but what the drumbeat of data — both on economic output and employment — shows is that it really is going to be a grind to arrive at a new equilibrium.It’s fantastic news, of course, that the economic expansion remains robust. There was only a single quarter from 2001 to 2019 in which the annualized growth rate exceeded 6 percent; in 2021 there have now been two in a row.The healing is happening. But the new numbers reflect just how severe the scars of last year really were. More

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    Consumer Spending Was a Big Factor in G.D.P. Expansion

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    Consumers are fueling the economic recovery.Consumer spending rose 2.8 percent in the second quarter, helping to offset declines in other parts of the economy. Spending on services was particularly robust as widespread vaccinations and falling coronavirus cases led Americans to return to restaurants, nail salons and other in-person activities.“We finally saw the full pivot to services driving consumer spending instead of goods,” said Diane Swonk, chief economist for the accounting firm Grant Thornton.Spending on goods remained strong, too, partly reflecting the continuing impact of the third round of stimulus checks, which arrived in Americans’ bank accounts in the spring.Business investment was also relatively strong, rising 1.9 percent, as companies stepped up spending on technology and equipment.The housing sector, however, was a drag on growth, shrinking 2.5 percent after three straight quarters of strong gains. That might seem surprising given stories of frenetic bidding wars in red-hot housing markets. But what matters to G.D.P. is construction, and new home building has been hampered by shortages of labor and supplies, and in particular the high price of lumber.Overall growth in the second quarter fell significantly short of economists’ expectations. But that was largely because of weaker-than-expected government spending, particularly at the state and local level, as well as an unexpectedly sharp drop in inventories. Both of those factors are likely to reverse later this year. More

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    Pandemic Recession Officially Lasted Only Two Months

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    The pandemic recession is officially over.In fact, it has been over for more than a year.The National Bureau of Economic Research, the semiofficial arbiter of U.S. business cycles, said Monday that the recession had ended in April 2020, after a mere two months. That makes it by far the shortest contraction on record — so short that by June 2020, when the bureau officially determined that a recession had begun, it had been over for two months. (The previous shortest recession on record, in 1980, lasted six months.)But while the 2020 recession was short, it was unusually severe. Employers cut 22 million jobs in March and April, and the unemployment rate hit 14.8 percent, the worst level since the Great Depression. Gross domestic product fell by more than 10 percent.The end of the recession doesn’t mean that the economy has healed. The United States has nearly seven million fewer jobs than before the pandemic, and while gross domestic product has most likely returned to its prepandemic level, thousands of businesses have failed, and millions of individuals are still struggling to get back on their feet.To economists, however, recessions aren’t simply periods of financial hardship. They are periods of economic contraction, as measured by employment, income, production and other indicators. Once growth resumes, the recession is over, no matter how deep a hole remains. The recession that accompanied the 2008 financial crisis, for example, ended in June 2009 — four months before the unemployment rate hit its peak, and years before many Americans began to experience a meaningful rebound.The unusual nature of the pandemic-induced economic collapse challenged the traditional concept of a “recession.” The National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” Taken literally, the latest downturn fails that test — the recession lasted mere weeks. But the bureau’s Business Cycle Dating Committee decided that the contraction should count nonetheless.“The committee concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warranted the designation of this episode as a recession, even though the downturn was briefer than earlier contractions,” the committee said in a statement. More

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    Here's One Thing Missing from President Biden's Budget: Booming Growth

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    For all the administration’s focus on transformational policies, it’s not forecasting an outburst of economic potential.President Biden’s budget proposal includes billions of dollars for clean energy, education and child care — ideas being sold for their potential to increase America’s economic potential. One thing it does not include: an outright economic boom.In the assumptions that underpin the administration’s budget, economic growth is strong in 2021 and 2022 — but strong enough only to return the economy to its prepandemic trend line, not to surge above the trajectory it was on throughout the 2010s.Then in 2023, the administration expects gross domestic product, the broadest measure of economic activity, to rise at a slower 2 percent rate, then 1.8 percent a year through the mid-2020s. That is lower than the 2.3 percent average annual growth rate experienced from 2010 to 2019.The administration’s outlook is consistent with projections by other forecasters, including at the Congressional Budget Office and in the private sector. But it means that the Biden White House is not — at least not formally — expecting the kind of rip-roaring growth that characterized periods like 1983 to 1989 (with an average annual G.D.P. growth of 4.4 percent) and 1994 to 2000 (4 percent).Those two episodes coincided with much more favorable demographic trends. They also helped propel two presidents to comfortable re-elections.If the new projections were to prove accurate, it would imply two years of strong growth paired with moderate inflation as the nation recovered from the pandemic heading into the 2022 midterm elections, but then comparatively low growth in the run-up to the 2024 election.The sober estimate contrasts with the approach Mr. Biden has taken to selling his agenda publicly. The framing of his signature plans for infrastructure and family support has been that they will enable the economy to become more vibrant and productive.“There’s a broad consensus of economists left, right and center, and they agree what I’m proposing will help create millions of jobs and generate historic economic growth,” Mr. Biden said in an address to Congress in April.It is a striking contrast with the approach taken by the Trump administration — a gap between presidential styles buried on Table S-9 of the two presidents’ budgets. The Trump administration’s final prepandemic budget proposal, published in February 2020, forecast that the economy would grow around 3 percent per year throughout the 2020s.If the Trump projections materialized, by 2030 the economy would be more than 11 percent bigger than what the Biden projections envision. However, the Trump administration persistently underdelivered on growth. G.D.P. rose an average of 2.5 percent in the three nonpandemic years of his presidency. The results are weaker still if you include the contraction of the economy in 2020.A wind farm in Carbon County, Wyo. The Biden administration says investment in clean energy will help America fulfill more of its long-term potential.Benjamin Rasmussen for The New York TimesCasey B. Mulligan, a University of Chicago economist who worked in the Trump White House, said in an email that the reduced growth forecasts were similar to those that career economic staff recommended in the Trump years. “They perennially overestimated Obama-era growth and underestimated Trump nonpandemic growth,” but you couldn’t see it in the published documents in the Trump years “because normally the political appointees such as me have a say in what is published.”The Biden administration has been inclined more broadly to a strategy of underpromising and overdelivering, most notably with the rollout of vaccines.Even before the budget’s official release, its growth projections became a subject of Republican attacks. “The Obama-Biden administration famously accepted slow growth as America’s ‘new normal’ while pursuing policies that sent jobs overseas,” House Republicans on the Ways and Means Committee said in a blog post. “President Biden appears to be lowering the bar even further.”Political volleys aside, it can be easy both to overestimate the ability of government policy to move the dial on overall growth — and to underestimate how much even small gains in productivity can mean when they compound over many years.In the 1980s boom, for example, the labor force was growing much more rapidly than it is now, helped by demographic trends and a rise in women entering work. In the 1990s boom, a surge in productivity resulted in large part from innovations in information technology, unconnected to government spending.“We are a really big economy where really big forces are shaping what happens to G.D.P. growth,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution and a former C.B.O. chief economist.Even these moderate projections by the Biden administration imply that its policies will lift growth in economic activity by a few tenths of a percent each year over a decade. This is significant when comparing it with the growth that would be expected by simply looking at demographic factors and historical averages of productivity growth. The forecast is more inherently optimistic about Mr. Biden’s policies — and their potential to increase productivity and the size of the work force — than it might seem at first glance..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-1jiwgt1{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;margin-bottom:1.25rem;}.css-8o2i8v{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-8o2i8v p{margin-bottom:0;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-1rh1sk1{margin:0 auto;overflow:hidden;}.css-1rh1sk1 strong{font-weight:700;}.css-1rh1sk1 em{font-style:italic;}.css-1rh1sk1 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#ccd9e3;text-decoration-color:#ccd9e3;}.css-1rh1sk1 a:visited{color:#333;-webkit-text-decoration-color:#ccc;text-decoration-color:#ccc;}.css-1rh1sk1 a:hover{-webkit-text-decoration:none;text-decoration:none;}“Making the claim that your fiscal policies will boost growth by four-tenths of a point seems optimistic, but I can see how they could get there,” she said.Jason Furman, the Obama administration’s former top economist, said: “I think there’s a problem that people have in their head — more extravagant ideas about what economic policy can do and how quickly it can do it. When you’re talking about productivity enhancement, you’re talking about compounding that becomes a big deal for a long time.”In other words, the difference of a few tenths of a percent of G.D.P. growth might not mean much for a single year, but a gap of that size that persists for many years has a big impact on living standards.Some of the administration’s policies, by design, would focus on the very long-term impact on the nation’s economic potential. For example, additional money for community colleges might actually depress the size of the labor force, and thus G.D.P., in the short run if more adults go back to school. But it would then increase those workers’ productive potential, and thus contribution to growth, for the decades that follow.Conservatives, for their part, view the Biden agenda as likely to restrain growth, particularly once tax increases and new regulatory action go into effect. Mr. Mulligan, the Trump adviser, said he believed the Biden agenda would reduce the nation’s growth path by around 0.8 percentage points a year compared with its Trump-era trajectory. Douglas Holtz-Eakin, president of the American Action Forum, said he thought Mr. Biden’s policies could create faster growth in the short term but slower growth in the long run because of taxes and spending.The Biden White House is more optimistic about what is possible for American workers. After the post-pandemic recovery, it projects a 3.8 percent unemployment rate from 2023 on, which is a bit lower than the levels forecast by the C.B.O. (an average of 4.2 percent from 2023 to 2031) or the Fed (4 percent is the median longer-run unemployment forecast of its leaders). It’s also lower than the 4 percent post-2023 jobless rate included in the Trump budget.The administration is optimistic about the post-pandemic recovery in the job market, projecting a 3.8 percent unemployment rate from 2023 on.Hannah Beier for The New York TimesThis reflects the lessons of 2019, when the jobless rate was consistently below 4 percent without causing excessive inflation or other problems. It’s a welcome sign for anyone who thinks that running a tight labor market — a high-pressure economy, as Treasury Secretary Janet Yellen calls it — is a good thing.Forecasts, on their own, aren’t worth more than the paper on which they are printed. A bold prediction of the boom that’s coming wouldn’t mean much if it didn’t materialize. And the world described in the Biden team’s forecasts is hardly a gloomy one: Low unemployment, low inflation and steady growth is a nice combination, and one that could describe much of the period from 2016 to 2019.The question for Mr. Biden is whether that will be enough to qualify as building back better. More

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    Biden’s Budget Sees Low Inflation, Rising Debt and Slow Economic Growth

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    The proposal sheds new light on President Biden’s economic agenda and underscores the administration’s belief that the country’s fiscal situation is manageable.WASHINGTON — President Biden’s $6 trillion budget proposal represents the largest increase in federal spending since World War II and offers the most detailed look to date of the White House’s economic priorities. More

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    Auto sales helped get the American economy off to a good start in 2021.

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    In the first months of 2021, what was good for the auto industry was decidedly good for the American economy.Spending on motor vehicles and parts rose almost 13 percent in the first quarter, making a big contribution to the increase in gross domestic product, the Commerce Department reported Thursday. Strong sales of new and used vehicles were propelled by consumers who had delayed purchases earlier in the pandemic and by others who — because of the virus — wanted to rely less on public transit or shared transportation services like Uber.Two rounds of stimulus payments since late December were a big factor. Low interest rates, readily available credit, rising home values and stock prices, and strong trade-in values for used models also eased the path for consumers.In fact, demand in the first quarter was robust enough that the auto industry was able to post healthy results despite a shortage of computer chips that forced temporary shutdowns of many auto plants.The number of new cars and light trucks sold increased 11 percent from the comparable period a year earlier, to 3.9 million, according to the auto-sales data provider Edmunds.com.On Wednesday, Ford Motor reported it made a $3.3 billion profit in the quarter, its highest total since 2011. While it produced 200,000 fewer vehicles in the quarter than it had planned, the average selling price of Ford models rose to $47,858, 8 percent higher than in the first quarter a year ago, Edmunds reported.The combination of strong consumer demand and tight inventories — partly a result of the chip shortage — has produced something of a dream scenario for auto retailers. At AutoNation, the country’s largest chain of dealerships, many vehicles are being sold near or at sticker price even before they arrive from the factory.“I’ve never seen so much preselling of shipments,” said Mike Jackson, the chief executive. “These vehicles are coming in and going right out.”In the first quarter, AutoNation’s revenue jumped 27 percent, to $5.9 billion, and the company reported $239 million in profit. That was a turnaround from a loss a year ago, when the pandemic crimped sales and forced AutoNation to close stores. More

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    The Economy Is (Almost) Back. It Is Looking Different Than It Used To.

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    The recovery is profoundly unequal across sectors, unbalanced in ways that have big implications for businesses and workers.There have been a lot of strange economic numbers over the last 14 months, as the world has been whipsawed by the pandemic. But one particular line of the first-quarter G.D.P. numbers released Thursday stands out even so.Americans’ spending on durable goods — cars and furniture and other goods meant to last a long time — rose at a stunning 41.4 percent annual rate in the first three months of the year. Enjoy your Pelotons and Big Green Eggs, everybody.The central reality of the economy in 2021 is that it’s profoundly unequal across sectors, unbalanced in ways that have enormous long-term implications for businesses and workers.The economy is recovering rapidly, and is on track to reach the levels of overall G.D.P. that would have been expected before anyone had heard of Covid-19. But that masks some extreme shifts in composition of what the United States is producing. That matters both for the businesses on the losing end of those shifts and for their workers, who may need to find their way into the growing sectors.In such a tumultuous time, it helps to look at the G.D.P. numbers not in terms of how they changed compared with last quarter or last year, but with the prepandemic economy. How does the actual number in the first quarter compare with what that number would have been if it had grown at a steady 2 percent annual rate since the end of 2019, the last quarter unaffected by the pandemic.This approach confirms the basic idea that the economy is not far from that prepandemic trend line. In the first quarter, overall G.D.P. was only 3.3 percent below where it would have been in that hypothetical pandemic-free world. The United States is on track to surge above that 2019 trend in the second quarter currently underway.But as the extreme spike in first-quarter numbers reflects, there has been a huge reallocation of economic activity toward durable goods. Spending on cars and trucks is 15.1 percent higher than it would have been on the 2019 trajectory; spending on furnishings and durable household equipment is 16.6 percent higher; and spending on recreational goods is a whopping 26 percent higher.Altogether, durable goods spending is running $348.5 billion higher annually than it would have been in that alternate universe, as Americans have spent their stimulus checks and unused travel money on physical items.The housing sector is experiencing nearly as big a surge. Residential investment was 14.4 percent above its prepandemic trend, representing $90 billion a year in extra activity. And that was surely constrained by shortages of homes to sell, and lumber and other materials used to make them. It is poised to soar further in coming months, based on forward-looking data like housing starts.Another bright spot is business investment in information technology. The tech industry has been comparatively unscathed by the crisis. Spending on information processing equipment in the first quarter was 23 percent higher than its prepandemic trend, and investment in software 7.4 percent higher.Then there are the losers.The troubles of service industries, especially related to travel, are well documented. While spending on restaurants, airline tickets, concerts and other recreational activities grew in the first quarter, it was a considerably smaller surge than the one that went to physical items, and not nearly big enough to fill in the deep hole those sectors face. Spending on transportation services remains 23 percent below its prepandemic trend, recreation services 31 percent, and restaurants and hotels 19 percent.Those three sectors alone represent $430 billion in “missing” economic activity — largely equivalent, it’s worth noting, to the combined shift of economic activity toward durable goods and residential real estate.A corollary shows up in trade data. Services exports are down 26 percent compared with the prepandemic trend, which reflects in significant part the freeze-up in global travel.Less widely understood is a steep pullback in the energy sector.There are two sides of the same coin: Consumer spending on gasoline and other energy goods is down 11 percent from its prepandemic trend line. And business spending on structures is down 19 percent, which reflects a pullback in investment by both the oil extraction industry and the commercial real estate sector.Separately, the pullback in state and local governments, many of which have faced funding crunches, is real. Their spending is 4.3 percent below the prepandemic trend, another $89 billion in lost activity, though that is likely to return as federal stimulus dollars flow to their coffers and schools reopen.In every recession, shifts take place in the composition of economic activity; the economy rarely looks the same after a wrenching event as it did before. But what is striking about this crisis is the scale and speed of the economy’s rewiring.We don’t yet know how fully service industries will recover as vaccinations take place, or whether durable goods spending will return to more normal levels as stimulus checks are spent and people reallocate their budgets toward travel. We also don’t know whether the surge in information technology spending and the pullback in oil drilling are part of a longer-term shift in the economy (all the more so given the Biden administration’s emphasis on clean energy investment).Moreover, to the degree these shifts in the composition of the economy may be semi-permanent, we don’t know how seamlessly the economy will adjust. Many former waiters or hotel clerks may be ill-suited to becoming construction workers or software engineers.That’s what makes the economy of 2021 so promising but also worrying. The boom is here. We just don’t know yet how bumpy the ride will be in trying to return to something that feels like full-fledged prosperity. More

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    G.D.P. growth accelerated in the first quarter.

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    The economy picked up speed last quarter, shaking off some of the lingering effects of the pandemic as consumer spending grew, bolstered by government stimulus checks and an easing of restrictions in many parts of the country.The Commerce Department reported Thursday that the economy expanded 1.6 percent in the first three months of 2021, compared with 1.1 percent in the final quarter last year.On an annualized basis, the first-quarter growth rate was 6.4 percent.“We’re running on all cylinders in terms of economic activity,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “People are anxious to get out and return to their normal lives, and there’s pent-up demand.”“It doesn’t hurt that the stock market is at a record high and the housing market is strong,” he added. “Consumers have built up roughly $2 trillion in excess savings.”Overall economic activity should return to prepandemic levels in the current quarter, Mr. Anderson said, while cautioning that it will take until late 2022 for employment to regain the ground it lost as a result of the pandemic.Still, the labor market does seem to be catching up. Last month, employers added 916,000 jobs and the unemployment rate fell to 6 percent. Tom Gimbel, chief executive of LaSalle Network, a recruiting and staffing firm in Chicago, said: “It’s the best job market I’ve seen in 25 years. We have 50 percent more openings now than we did pre-Covid.”Hiring is stronger for junior to midlevel positions, he said, with strong demand for professionals in accounting, financing, marketing and sales, among other areas. “Companies are building up their back-office support and supply chains,” he said. “I think we’re good for at least 18 months to two years.” More