U.S Economy Looking Good As Spending Jumps In March
DEBBIE ELLIOTT, HOST:
The U.S. economy appears to be in full spring flower. Garden shops, restaurants and car dealers are all seeing a boost in business. And there are signs of improvement in the job market as well. This isn't lost on the stock market. Both the Dow Jones Industrial Average and the S&P 500 index ended the week at record highs. NPR's Scott Horsley joins us now. Hi, Scott.
SCOTT HORSLEY, BYLINE: Hi, Debbie.
ELLIOTT: So there have been times over the last year when the booming stock market seemed a bit disconnected from what the rest of the country was going through. But this week, there seemed to be lots of good economic news. What's happening?
HORSLEY: Yeah, there was kind of a spring awakening. One economist I spoke to said everything was coming up tulips this week, even if there are still some storm clouds on the horizon. One big boom is the consumer spending you mentioned. Spending was up nearly 10% in March. And for the most part, this was not the kind of hunker-down spending we've seen for much of the year. This was get-out-of-the-house spending. You know, people were buying new cars and new clothes and sporting goods. And they were going to physical stores, not just buying everything online to have it delivered.
Economist Julia Coronado, who heads MacroPolicy Perspectives, says those are all encouraging signs.
JULIA CORONADO: There's two really big forces. One is the speed of vaccinations has accelerated. And we had this very sizable fiscal support package, which put money directly into consumers' pockets.
HORSLEY: By fiscal support, she's talking about those $1,400 relief payments that most Americans got in March.
ELLIOTT: OK. So there was more good news in the weekly unemployment numbers. What's happening there?
HORSLEY: Yeah, state unemployment claims fell last week to their lowest level since the beginning of the pandemic. We've also seen a decline in the total number of people who are receiving unemployment. And employers have been adding more workers in each of the last three months. Now that consumer spending is up, we could see even bigger job gains in the months to come.
ELLIOTT: You know, I've been seeing a lot of help wanted signs. Where are we seeing employers looking for workers?
HORSLEY: Bars and restaurants added 176,000 jobs last month, which is a sign of that increased demand. And restaurants have been a good barometer throughout the pandemic. They laid off millions of workers when business was bad. And they've been at the forefront of hiring now the economy is on the mend.
I talked with Cameron Mitchell, who runs 56 restaurants in more than a dozen states. He says his sales are almost 90% back to their pre-pandemic levels, even though he still has some limits on indoor seating in parts of the country. His weekday business is still slow, he told me, because there aren't a lot of business lunches or dinners. But weekend traffic with families eating out is pretty strong. And I asked Mitchell if his restaurants have gotten a boost when the government sent out those $1,400 relief payments. He said yes and no.
CAMERON MITCHELL: That's a double-edged sword. I mean, we've got a huge labor shortage now. People don't want to come back to work because of those stimulus payments. So, you know, restaurants across the country are struggling to find workers. So, yes, it's helped on the sales front a little bit, but it's also a bit more difficult to operate our restaurants.
HORSLEY: This is something I hear from a lot of employers. They complain that even with millions of people out of work, government payments are making it harder to find employees. It's also true, of course, that many people are still nervous about working in a face-to-face environment when we still see more than 70,000 new coronavirus infections every day.
ELLIOTT: So, Scott, we've heard time and time again that the key to a full economic recovery is getting control of the pandemic. What are the signs there?
HORSLEY: You're right. The economy is so closely tied to the path of the pandemic, and the U.S. is giving well over 3 million vaccine shots every day. But about a quarter of all Americans say they don't want to get a vaccine. And economist Julia Coronado says that could be a problem before too long.
CORONADO: Right now, we're in a period where, finally, everybody who wants a vaccination can get one, and so we're seeing this rapid progress. But that progress could stall out depending on how much hesitancy there is amongst people.
HORSLEY: We are also seeing slower vaccine rollouts in Europe. And there are some countries where almost no one's been vaccinated. So long as that's the case, there is a risk of new, more dangerous variants making their way back to the U.S. Debbie, that would be a big, ugly weed in our blossoming economic recovery.
ELLIOTT: NPR's Scott Horsley, thanks so much.
HORSLEY: Good to be with you, Debbie.
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