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Fed data: US economy still contracting

Sunday, 28 March 2021 2:17 AM [ Last Update: Sunday, 28 March 2021 2:17 AM ]

Ramin Mazaheri

Press TV, Chicago

Just ahead of United States President Joe Biden’s long-awaited first press conference Federal Reserve Chairman Jerome Powell made the media rounds claiming that “substantial” economic progress has been made.

However, that contradicted extensive new data from the Fed itself which found that the economy contracted in February, while their National Activity Index plunged into the negative for the first time since last April, the peak of the pandemic.

The index based on 85 indicators regarding personal spending, employment, retail sales and production has been in the negative over the average of the last three months, disproving widespread bullish talk that the US economy is recovering.

What's certain is that there was no so-called "snap-back" or "V-shaped" economic recovery. Instead a "K-shaped" recovery has become cemented, with the wealth of the upper class increasing while that of the average person and the lower classes plunged in the opposite direction.

Biden recently approved a $1.9 trillion emergency coronavirus plan, but it didn’t include a single long-term social program. He also backtracked on key issues such as a $15 minimum wage, student debt relief and the size of household stimulus. This week top pollster Ipsos found that Biden’s approval rating plunged 6 points.

George W. Bush, Barack Obama and Donald Trump all refused to boost the economy of the everyman despite prolonged economic malaise. Failure to remedy the terrible economic data from 2020 and over the first quarter of 2021 could cause major dissension in an incredibly polarised nation.

The US is betting that a major coronavirus vaccine rollout will return economic growth to pre-pandemic levels no later than the second half of this year, hopefully.

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