July 30, 2021: -On Thursday, the U.S. economy increased at a disappointing rate in the second quarter in a sign that the U.S. has escaped the shackles of the Covid-19 pandemic but still has work to do, the Commerce Department reported.
Gross domestic product, the measure of all goods and services produced in the April-to-June period, accelerated 6.5% on an annualized basis. That was better than the 6.3% gain in the first quarter, which was revised down narrowly.
While that would have been strong before the pandemic, the gain was considerably less than the 8.4% Dow Jones estimate.
Gross private domestic investment decreased 3.5% as declines in personal inventory and residential investment held back gains. Rising imports and a 5% decline in the rate of federal government spending, despite the ballooning budget deficit, also were a factor, the Bureau of Economic Analysis report said.
Thanks to rising personal expenditures, the overall increase came, which rose 11.8%, as consumers accounted for 69% of all activity. Nonresidential fixed investment, exports, and state and local government spending also helped boost output.
The gain also was a yardstick for how far the economy had come from the shutdowns imposed in the early days of the pandemic when governments across the country halted large swaths of economic activity to combat the spread of the coronavirus.
At its nadir, the economy is collapsing 31.4% in the second quarter of 2020; it bounced back 33.4% in the subsequent three-month period and kept pushing towards normal since.
In the years before the pandemic, the Q2 gain would have been the strongest since the third quarter of the year 2003.
Though output has remained less than its pre-pandemic level, the National Bureau of Economic Research pronounced the recession that started in February 2020 to have ended just two months, the shortest on record.
The areas of the economy remain underwater as the labor market, in particular, has struggled to get back to normal.
On Thursday, a separate data point reported that 400,000 people filed initial claims for unemployment benefits for the week on July 24. That level is nearly double the pre-pandemic norm and was above the 380,000 Dow Jones estimate.