Key Signals Show U.S. Economy is Improving

February 22, 2021
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Investors and people across America can take some relief from the latest economic signals that show the economy is gradually improving. Even though a complete recovery could take years, there are plenty of signs indicating that the worst of the Coronavirus impact has already passed.

Here are the positive signals to take note of in the first quarter.

Positive Signs of Economic Recovery

Manufacturing is ahead of the curve, outperforming other sectors. Production increased by 1.3% in December, narrowly missing an estimated target of 1.6%. This was followed by a 0.9% gain in January, according to the Federal Reserve.

Activity in oil and gas was responsible for much of the increase, this sector, tied to both energy and general manufacturing, was up 2.3% in January. Oil prices are up to nearly $60 per barrel, which should have long-reaching benefits for exporters and energy producers.

There is still weakness in some key areas, especially aerospace manufacturing. Aircraft production output is expected to increase again as global travel restrictions are relaxed. The development and availability of several Coronavirus vaccines will help to create momentum. As more people are immunized, air travel and tourism are likely to benefit.

Analysts expect that consumer spending will increase when January data is reported this Friday. Consumer spending is responsible for up to 70% of the total economic activity in the United States. As more people return to work, consumer spending will continue to climb. The unemployment rate fell to 6.3% in early February, the best it has been in months. There’s still a lot of room to improve here. The rate was 3.5% in February 2020 before the health crisis.

The Biden administration is pushing for a stimulus bill worth nearly $2 trillion. The President is hoping that this will be approved in Congress within the next month. The relief package will include direct assistance for families, including mortgage and nutrition assistance, as well as funding for state and federal programs that could boost economic output.

Plenty of Strong Signals for Investors

Earnings have been mostly positive across corporate America, which suggests that the stock market rally will continue in the mid-term. With positive economic signals, confidence is likely to remain. Investors at all levels can have optimism as we move towards the end of the first quarter and deeper into 2021.

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