which would raise hopes that layoffs will slow.
Optimism is rising that increasing vaccinations
and a new federal rescue aid package that will
likely be enacted soon will spur growth and
hiring in the coming months. Many analysts
foresee the economy expanding at an annual
rate of at least 5 percent in the current quarter
and 7 percent for all of 2021.
Already, crucial sectors of the economy are
showing signs of picking up as vaccinations
increase, federal aid spreads through the
economy and the Fed’s low-rate policies
fuel borrowing and spending. Last month,
America’s consumers bounced back from
months of retrenchment to step up their
spending by 2.4% — the sharpest increase in
seven months and a sign that the economy
may be poised to sustain a recovery.
The solid gain suggested that many people
were growing more confident about spending,
especially after receiving $600 checks that
went to most adults early this year in a federal
economic aid package. Additional relief is
likely for American households and businesses
as Congress considers President Joe Biden’s
proposal for a new aid package amounting
to $1.9 trillion.
At the same time, rising bond yields in the
financial markets are pointing to worries that
higher inflation could be on the way as the
economy recovers. This week, Lael Brainard, a
member of the Fed’s Board of Governors, sought
to calm investors by stressing that the Fed, while
generally optimistic in its outlook, is still a long
way off from raising interest rates or otherwise
lessening its support for the economy.