U.S. Economy Exceeds Pre-Pandemic Size With 6.5% Q2 Growth
Fueled by vaccinations and government aid, the US economy grew at a solid 6.5% annual rate last quarter in another sign that the nation has achieved a sustained recovery from the pandemic recession.
Photo Insert: The U.S. seems on its way to economic recovery
The total size of the economy has now surpassed its pre-pandemic level, Martin Crutsinger reported for the Associated Press (AP).
Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product (GDP)— its total output of goods and services — accelerated in the April-June quarter from an already robust 6.3% annual growth rate in the first quarter of the year.
The latest figure fell well below the 8%-plus annual growth rate that many economists had predicted for the second quarter. But the miss was due mainly to clogged supply chains related to the rapid reopening of the economy.
Those bottlenecks exerted a larger-than-expected drag on companies’ efforts to restock their shelves. The resulting slowdown in inventory rebuilding, in fact, subtracted 1.1 percentage points from last quarter’s annual growth.
By contrast, consumer spending — the main fuel of the US economy — surged for a second straight quarter, advancing at an 11.8% annual rate. Spending on goods grew at an 11.6% rate, and spending on services, from restaurant meals to airline tickets, expanded at a 12% pace as vaccinations encouraged more Americans to shop, travel and eat out.
Companies, too, spent with confidence last quarter. Business investment surged at an 8% annual rate in the April-June quarter, adding 1.1 percentage points to GDP.
With consumers and businesses expected to keep spending, many analysts expect the economy to grow at a robust pace of around 6.5% for all of 2021, despite the supply shortages and the possibility of a resurgent coronavirus in the form of the highly contagious delta variant.
That would amount to the strongest calendar-year growth since 1984.