While the nation is working its way to a stronger economy, economists say America is still in a “deep hole.” While the U.S. still has a long way to go, experts predict that the economy grew at an annualized rate of 6.1% in the first three months of 2021. While that growth was faster than the 4.3% recorded at the end of 2020, it was much slower than the 33.4% jump when the economy first started to reopen in 2020. As the economy pushes along, all eyes fall to the Fed and President Biden to see what their next big moves will be.
America’s economy is rebounding. But it is still in a deep hole
America is emerging from the worst of the pandemic, and that will mean some eye-popping figures when the government releases economic growth data Thursday. But the big jump — fueled by resurgent consumer spending after a year in lockdown — will still be starting from a deep hole.
Economists predict that the US economy grew at an annualized rate of 6.1% in the first three months of the year — faster than the 4.3% recorded at the end of 2020, but far slower than the enormous 33.4% jump in the second quarter of 2020 when the economy started to reopen.
An “annualized” rate is not the same as measuring one quarter to the next; annualizing assumes a quarterly rate would continue for a full year. Economists typically use the annualized rate for US GDP because it makes it easier to compare numbers over different periods of time.
Before the pandemic hit, US gross domestic product, the broadest measure of economic activity, grew on average some 2.5% per quarter on an annualized basis. During the pandemic, the economy ground to a halt, and GDP contracted at a record pace.
Now that the nation is in the rebound stage, growth rates look exceptional. But that’s because the economy is still making up lost ground.
See how long experts think it will take for our economy to grow back to pre-pandemic strength, here.
Investor’s Business Daily via Yahoo! Finance/Paul Katzeff
Capital Gains Tax: Are You Exempt From New Top Rate That Biden Wants?
President Joe Biden ran his capital gains tax proposal up the proverbial flagpole. If enacted, it would impact just taxpayers with incomes over $1 million. Those wealthiest Americans would see their long-term capital gains taxed at a new, higher top rate of 39.6%.
That new top rate would almost double today’s top rate of 20%.
Should you be alarmed? Maybe. But odds are you won’t be affected.
Here are five reasons not to panic.
Fox Business/Jonathan Garber
Stocks mixed ahead of Fed, Biden’s address to Congress
U.S. stock futures were mixed Wednesday morning as traders sifted through earnings reports and awaited the Federal Reserve’s latest policy decision and details of President Biden’s tax plan.
Dow Jones Industrial Average futures were down 75 points, or 0.22%, while S&P 500 futures were up 0.01% and Nasdaq 100 futures were lower by 0.17%.
With the Federal Reserve expected to hold its benchmark interest rate near zero at the conclusion of Wednesday’s meeting, traders will be paying close attention to any hints the central bank could begin to taper its asset purchase program. The decision will be released at 2 p.m. ET and Chairman Jerome Powell’s press conference will take place at 2:30 p.m. ET.
The Fed’s decision will come hours ahead of Biden’s first address to a joint session of Congress, where he is expected to lay out his plans to raise the top corporate tax rate and capital gains tax on wealthy Americans in order to pay for his plans to spend trillions of dollars on infrastructure and families.
Continue reading, here.