April 2021 National Economic Outlook

Huge March Increases in Employment, Retail Sales, and Housing Starts Signal the Start of a Sustained Recovery

Executive Summary

Employment rose by 916,000 in March, based on a Bureau of Labor Statistics survey of firms. This was the largest one-month increase in employment since August 2020.  

There was an enormous increase of 280,000 in employment in leisure/hospitality services, following an even larger gain of 384,000 in February, as restaurants and hotels are reopening and rehiring. 

  • Job growth averaged 539,000 in the three months through March, up from just 64,000 in the three months through January 2021. 
  • The unemployment rate fell to 6.0% in March from 6.2% in February, and is down from 14.8% in April 2020. 
  • However, unemployment is still much higher than it was before the pandemic; the unemployment rate was 3.5% in February 2020.

Retail sales jumped 9.8% in March from February, the biggest one-month increase since they surged 18% in May 2020 as stores reopened during the early stages of the pandemic.

Other March details were very good. Retail sales excluding autos jumped 8.4%, and sales excluding autos and gasoline jumped 8.2%. Consumer spending is leading a strong economic recovery in early 2021.

With two sets of stimulus payments in the first few months of the year and millions of people receiving vaccinations every day, consumers are spending, particularly on goods. Better weather in March also contributed to the huge increase; winter storms depressed sales across much of the country in February.

Growth in retail sales and consumer spending will remain exceptionally strong as vaccinations continue and coronavirus cases eventually decline, states further relax restrictions on economic activity, and households gradually spend the stimulus checks that they have received.

Housing starts jumped 19% in March from February to 1.739 million at an annual rate; this was the most starts in one month since 2006, at the tail end of the housing boom. Some of the March increase came from construction projects that were delayed by bad weather in February.

But demand for new homes, especially single-family homes, is very strong in early 2021 due to increased desire for homeownership in the wake of the pandemic and extremely low mortgage rates. Permits for new residential construction also rose in March, pointing to further improvement in homebuilding in the months ahead.


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April National Economic Outlook

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