U.S. economy gets boost from hefty federal aid

Massive government stimulus and an impressive vaccine roll-out gave the U.S. economic recovery a shot in the arm during the opening months of 2021.

U.S. GDP, the broadest measure of economic growth, swelled at 6.4 percent annual rate in the first quarter, according to data released Thursday, making that the second-strongest pace of economic growth in more than 17 years.

Consumers and businesses have been spending the trillions of dollars given out by the government to offset the economic damage done by the health crisis and near-zero interest rates have contributed to the spending boom as well.

But that could spell trouble for the ambitious economic plan being rolled out by President Biden, now totaling around $4 trillion, including a sweeping package for families and education unveiled Wednesday in his first joint speech to Congress.

Republicans have balked at the idea of more stimulus and higher taxes to pay for it.

And some economists fear more stimulus could stoke inflation.

But with so many Americans still out of work, Federal Reserve Chairman Jerome Powell this week said he isn't worried about the risk of runaway inflation and will keep rates near zero.

He called the economic recovery uneven and incomplete.

"The economy is a long way from our goals and it is likely to take some time for substantial further progress to be achieved."

A second report Thursday showed the labor market continues to heal but still has a long way to go.

New applications for jobless benefits dropped to 553,000, a new crisis-era low, but that's still more than double the number consistent with a healthy labor market.

Video Transcript

- Massive government stimulus and an impressive vaccine rollout gave the US economic recovery a shot in the arm during the opening months of the year. US GDP, the broadest measure of economic growth, swelled at a 6.4% annual rate in the first quarter according to data released Thursday, making that the second strongest pace of economic growth in more than 17 years. Consumers and businesses have been spending the trillions of dollars given out by the government to offset the economic damage done by the health crisis, and near-zero interest rates have contributed to the spending boom as well.

But that could spell trouble for the ambitious economic plan being rolled out by President Biden, now totaling around $4 trillion, including a sweeping package for families and education unveiled Wednesday in his first joint speech to Congress. Republicans have balked at the idea of more stimulus and higher taxes to pay for it, and some economists fear more stimulus could stoke inflation. But with so many Americans still out of work, Federal Reserve Chairman Jerome Powell this week said he isn't worried about the risk of runaway inflation and will keep rates near zero. He called the economic recovery uneven and incomplete.

JEROME POWELL: The economy is a long way from our goals, and it is likely to take some time for substantial further progress to be achieved.

- A second report Thursday showed the labor market continues to heal but still has a long way to go. New applications for jobless benefits dropped to 553,000, a new crisis-era low. But that's still more than double the number consistent with a healthy labor market.