13th April 2021
Hugues Chevalier, Economist
The latest indicators suggest that the US economy is running at full speed. After experiencing the worst recession since World War II, the United States is on track to exceed all growth forecasts for this year. Indeed, the Biden plan of 1.900 billion dollars combined with the vaccination plan well ahead of the other OECD countries, except the United Kingdom, allows an accelerated reopening of all economic sectors. This optimism is confirmed by the acceleration in the momentum of the labour market, with almost a million of new jobs created in March only, almost 50% higher than expected. Moreover, the unemployment rate continues to decline, while remaining, in March, 2.5 points above the pre-pandemic level. As a result, consumer sentiment jumped in March, suggesting an acceleration of durable goods purchases. And it is already happening, especially in the automotive sector with an increase in production of (only) 8% year on year in the 1st quarter due to bottlenecks. Household consumption is back, but production capacity cannot cope with this. Car manufacturers had to slow down production due to the global shortage of microprocessors. West Coast ports, where 30% of US imports are passing through, are completely saturated, unloading wait times reaching nearly two weeks. Due to this bottleneck situation, the prices of several raw materials rose sharply (+ 300% y/y for timber, + 40% for fuel, etc.) and could generate a resurgence of inflation. Monetary authorities will therefore have to be vigilant during the next weeks and key rates might rise faster than expected.