US slightly revises second quarter GDP estimate to 6.7%

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WASHINGTON (AP) – The US economy grew at an annual pace of 6.7% from April to June, the Commerce Department said Thursday, slightly improving its estimate of last quarter’s growth in the face of a resurgence of COVID -19 in the form of the delta a variant.

The government’s estimate of growth in the second quarter – the last of three – was up from its previous estimate of an annual pace of 6.6%. This will likely mark a highlight for the expansion of the economy this year, as the virus slows down some activity, government support programs end, and manufacturing supply chain issues persist.

Thursday’s government report showed that the country’s gross domestic product – its total production of goods and services – accelerated by an annual rate of 6.3% in the first three months of the year.

In the first half of the year, the economy was boosted by broad federal support for the recovery from the pandemic recession – billions of dollars in individual stimulus payments, increased unemployment assistance, and aid small businesses.


Now, with these programs ending or have already expired, and with the spread of the delta variant having discouraged some people from flying, shopping and eating out, most economists say they think growth slows down during the July-September period. Most have estimated an annual rate of around 4% for the current quarter.

For all of 2021, a panel of forecasters from the National Association for Business Economics forecast growth of 5.7%. That would mark a solid rebound from an annual decline of 3.4% last year, when the economy was in the grip of the pandemic. And that would represent the strongest calendar year growth since an increase of 7.2% in 1984, when the country was emerging from a deep recession.

An even faster pace of expansion was, however, expected for this year. But the increase in COVID cases has weakened growth, hiring and consumer confidence. In addition, persistent supply chain problems have reduced output from auto factories and other manufacturers, further reducing growth. Supply chain problems are linked to the global outbreak of the pandemic, which has slowed the production of computer chips and other vital components made in Asia.

“The delta variant has become a kind of sandstorm preventing the economy from growing faster,” said Sung Won Song, professor of economics and business at Loyola Marymount University in Los Angeles. “The virus has contributed to supply and labor shortages. “

Most economists expect the economy to grow at a rate of at least 4% next year. This would be double the modest average annual gains in the decade following the 2008 financial crisis, when the economy embarked on a long, slow and abrupt recovery.

Next year’s growth could benefit if Congress manages to break a deadlock and approve a $ 1,000 billion bipartisan infrastructure bill as well as $ 3.5 trillion in social spending and a measure. climate. The outlook for both measures remains unclear. But even a reduced spending measure would likely provide some economic stimulus.

Analysts also expect the delta variant to hold back growth less next year.

“Delta seems to be running out of steam, and while it doesn’t go away, each successive wave should be less destructive,” said Mark Zandi, chief economist at Moody’s Analytics. “I expect the economy, which is very closely tied to the trajectory of the pandemic, to rebound as people return to restaurants and start traveling again.”

Zandi predicted that the economy will be strong enough over the next 18 months to restore full employment, with an unemployment rate of around 3.5%, by spring 2023. This would represent a three-year recovery over The labor market, which lost 22 million jobs after the pandemic ravaged the economy in March and April 2020. That would mark an unusually rapid recovery. After most recessions, it typically takes five or six years for the economy to achieve a full recovery in employment.

The Federal Reserve has fueled the economy with ultra-low interest rates and $ 120 billion in monthly bond purchases meant to maintain long-term lending rates. But last week, the Fed signaled it would likely start cutting those purchases as early as November.

By the end of 2002 or early 2023, the Fed is expected to start raising the short-term key rate, which influences many personal and business loans.


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