US economic growth weaker than expected in second quarter

U.S. GDP update

US economic growth rose only 6.5% on an annualized basis in the second quarter. This was a weaker increase than expected as strong consumption was offset by delays in private investment.

Data from the US Department of Commerce on Thursday fell short of economists’ forecasts of 8.5% growth on an annual basis, compared to a 6.3% increase in the first quarter.

The second-quarter rise in GDP, partially fueled by Joe Biden’s $ 1.9 trillion stimulus, surpassed pre-pandemic levels of US production for the first time after the Covid-19 struck.

GDP growth increased 1.6% compared to the previous quarter, based on indicators used by other major powers.

While consumer spending is strong, labor shortages, supply chain disruptions and inflation have all been reported as factors that could put pressure on economic activity as Covid-19 revives in some parts of the country.

Private consumption is the strongest component of GDP data, with spending increasing at an annual rate of 11.8%, compared to 11.4% in the first quarter. However, private domestic investment was dragged into new real estate investment figures, down 3.5% in the quarter.

The data also highlighted rising inflation. The PCE price index rose 6.4% compared to a 3.8% rise in the first quarter, and the core PCE index, which removes volatile food and energy costs, rose 6.1% compared to a 2.7% rise. In the first quarter.

Biden administration officials have expressed concern about the highly contagious delta mutant and its economic implications. “The economic course continues to depend on the course of the virus,” the Federal Reserve Board of Governance said Wednesday.

And in recent weeks, federal and local authorities have doubled their efforts to increase vaccination coverage among those who hesitate to fire.

Centers for Disease Control and Prevention Mask guidance People vaccinated this week, and many state and city governments, Employers such as Google, Began requiring employees returning to face-to-face work to be vaccinated or weekly tested.

“The most vulnerable part of the economy due to another Covid wave is services, especially leisure activities,” said Bank of America economists Stephen Juneau and Anna Chow. They warned that if pandemic restrictions were lifted and spending on services declined, a boom in spending on goods would unlikely offset the decline as stimulus payments diminished.

Yields on 10-year Treasuries remained around 1.27%, but fell 0.01 points to 1.249%.

Additional report by Matthew Rocco

US economic growth weaker than expected in second quarter

Source link US economic growth weaker than expected in second quarter

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