The US economy grew disappointingly in the second quarter, the Commerce Department reported Thursday as a sign that the US has escaped the shackles of the Covid-19 pandemic but has more to do.
The gross domestic product, a measure of all goods and services produced between April and June, rose by 6.5% on an annual basis. That was slightly better than the 6.3% increase in the first quarter, which was revised slightly downwards.
While that would have been strong before the pandemic, the gain was well below the 8.4% Dow Jones estimates.
Private gross inland investment declined 3.5% as the decline in private inventory and housing investment dampened profits. Rising imports and a 5% decline in government spending despite the skyrocketing budget deficit were also factors, according to the Bureau of Economic Analysis report.
The overall increase is due to increasing personal spending, which increased 11.8% as consumers accounted for 69% of all activity. Fixed investment, exports, and state and local government spending also contributed to the increase in output.
The personal savings rate fell sharply, falling from $ 4.1 trillion in the previous period to $ 1.97 trillion.
The headline win was a measure of how far the economy has come from the closings imposed in the early days of the pandemic, when governments across the country suspended much of economic activity to fight Covid.
At its lowest point, the economy slumped 31.4% in the second quarter of 2020; it recovered 33.4% in the following three months and has since moved towards normal.
In the years leading up to the pandemic, the growth in the second quarter would have been the strongest since the third quarter of 2003.
Although production has remained below pre-pandemic levels, the National Bureau of Economic Research stated that the recession that began in February 2020 ended just two months later, the shortest on record.
However, the second quarter is likely to be the peak of the pandemic recovery.
“The good news is that the economy is now past pre-pandemic levels,” wrote Paul Ashworth, chief US economist at Capital Economics. “But as the effects of fiscal stimulus subside, rising prices weaken purchasing power, the delta variant is running amok in the south and the savings rate is lower than expected, we expect GDP growth to be 3.5 in the second half of the year % annualized slowed down. ” Year.”
Nonetheless, areas of the economy remain under water, as the labor market in particular is struggling to return to normal.
In a separate report on Thursday, the Labor Department said 400,000 people had submitted initial claims for unemployment benefits for the week ending July 24th. That level is almost double what it was before the pandemic and above the Dow Jones estimate of 380,000. However, it was a decrease from the previous week’s 424,000.
Current claims rose to 3.27 million, according to data a week behind the headline. The total number of beneficiaries rose by nearly 600,000 to 13.16 million by July 10, according to data.
Correction: Annualized GDP profit was incorrectly reported in a summary. It was 6.5%. In addition, the personal savings rate dropped to $ 1.97 trillion.
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