Thanksgiving looks expensive this year, but the US economy is doing well

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As the US economy gradually recovers from the pandemic, there are things Americans can be thankful for. The US Bureau of Economic Analysis released two reasonably positive reports on the country’s economic outlook on Wednesday. The first was its quarterly report on gross domestic products (GDP) and corporate profits. The second highlighted personal income and expenses for October 2021.

GDP highlights for the third quarter of 2021

The GDP report shows an annual growth rate of 2.1% in the third quarter, after the 6.1% recorded in the second quarter. This figure was slightly higher than the 2% initially forecast for this period. The data shows a slight bump to an otherwise rapidly recovering economy.

A drop in consumer spending led to a decline in real business GDP in the third quarter across the country. The resurgence of COVID-19 cases has resulted in various limitations and delays in reopening businesses in several regions. In addition to this, public aid payments (canceled loans to businesses, subsidies to state and local governments, and social benefits to households) also declined in the third quarter.

The report also says real personal disposable income fell 4% in the third quarter, following a 29.1% drop in the second quarter, showing improvement. Corporate profits continued to rise after a strong performance in the second quarter. Profits rose 4.3% after rising 10.5% in the second quarter.

Improving economic conditions, combined with falling unemployment rates, bode well for the US economy this Thanksgiving.

More positive economic indicators

The number of jobless claims filed fell to a low of 52 years last week. However, the Ministry of Labor reported that the drop in such claims has been exacerbated by the difficulty of adjusting statistics for this time of year. Yet the labor market continues to tighten, with the unemployment rate falling to its lowest level since March 2020.

Steady job growth continues as many companies strive to widen the existing gap of over 10 million open jobs. However, as coronavirus vaccines become more widely available, more people are returning to work, with the monthly number of new hires surpassing 500,000 this year.

A personal income and expenditure report for October 2021 also indicated an increase in household spending. Consumer spending, which accounts for more than two-thirds of economic activity in the United States, rose 1.3% in October. This growth follows a 0.6% increase in September. In addition, consumers were supported by rising wages and larger savings, which allowed them to buy cars and travel.

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An expensive Thanksgiving

Despite an improving economic situation, rising inflation rates have pushed up the prices of goods in the United States. Currently, compared to 2020 prices, Thanksgiving food prices show a significant increase.

The Biden administration is making a concerted effort to curb inflation, currently causing the value of the US dollar to fall by 1% every 30 days. Federal Reserve Chairman Jerome Powell has been reappointed to continue to lead the world’s most powerful central bank. He was commissioned to help wean the US economy off emergency aid, despite high inflation and substantial job gains, which could threaten the US recovery.

Federal officials have agreed to cut their $ 120 billion in monthly purchases of treasury bills and mortgage-backed securities. The cut is expected to help lower inflation rates, with bond buying coming to a complete stop in June 2022. This timeline will mean Americans will likely experience the most expensive Thanksgiving in a long time this year.

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