Q2 2021 ECONOMIC REPORTS
The U.S. economy rose at an annual rate of 6.5% in the second quarter, slightly more than in Q1 but disappointing to economists expecting even healthier growth. Nevertheless, it was a clear signal that U.S. growth has broken free of the pandemic’s suffocating economic effects as the expansion pushed GDP beyond pre-pandemic levels. A year ago, second-quarter GDP plunged 31.4% before rebounding 33.4% in the third quarter with subsequent quarterly gains.
The Bureau of Economic Analysis said that gross private domestic investment fell 3.5% as declines in private 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 factors. The overall increase was attributed to increasing personal expenditures, 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. READ MORE >
Job growth improved steadily in the second quarter as businesses sought to keep up with the strong recovery. In June, wages rose for the third month in a row.
Nonfarm payrolls increased 850,000 in June, the largest gain in 10 months, more than the 706,000 estimate and greater than the 583,000 jobs added in May. Despite the gain, the unemployment rate at the end of the first half rose slightly to 5.9%.
The data from the Bureau of Labor Statistics through Q2 brings the total job recovery from pandemic losses to 15.6 million. More than 22.3 million workers were furloughed in March and April of last year after government-imposed restrictions. The total employment level is 7.13 million less than the job total of February 2020. READ MORE >
The Fed has signaled mild concern over higher-than-anticipated inflationary pressures, indicating it may increase interest rates sooner than expected.
Fed Chairman Jerome Powell acknowledged that the Federal Open Market Committee had discussed the issue at its June meeting at which officials left the benchmark short-term borrowing rate near zero. The statement from the committee, which was unanimous on leaving borrowing rates unchanged, said its headline inflation expectation increased from a full percentage point to 3.4% from March to June. READ MORE >
Through the first half of this year global growth remained on track to expand at the fastest pace in 80 years. But the recovery is uneven with emerging and developing economies continuing to struggle with low vaccination rates and high rates of infections slowing their improvement.
“While there are welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world,” said World Bank Group President David Malpass in the group’s June 2021 Global Economic Prospects. READ MORE >