As the United States continues to gradually crawl out of the economic cratering from 2020, many expected today’s report on the gross domestic product to be encouraging. As was the case three months ago, the question was how encouraging it might be.
Now we know. CNBC reported this morning:
The U.S. economy rose 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 more work to do, the Commerce Department reported Thursday. Gross domestic product, a measure of all goods and services produced during the April-to-June period, accelerated 6.5% on an annualized basis. That was slightly stronger than the 6.3% gain in the first quarter, which was revised down slightly.
Under normal circumstances, quarterly growth of 6.5% would be seen as extraordinary evidence of robust economic growth. Indeed, it’s the kind of number that would generate cartwheels from economic analysts.
That said, many projections headed into this morning’s report expected growth in the second quarter at 8.4%, and it now appears those forecasts were overly rosy.
That said, it’s tough to complain about strong economic growth, expectations notwithstanding, and thanks to the progress over the last three months, the overall size of the economy’s output has now returned to pre-pandemic levels.
Such a milestone was difficult to imagine a year ago as the economy cratered in response to the pandemic.
A New York Times report added, “Vaccinations and federal aid helped lift the U.S. economy out of its pandemic-induced hole this spring. The next test will be whether that momentum can continue as coronavirus cases rise, masks return and government help wanes.”
Postscript: It’s worth clarifying that today’s 6.5% quarterly figure refers to growth at an annualized rate, which is the standard way of reporting the data. In other words, if we saw 12 months of economic activity like what we saw in the fourth quarter, the economy would grow by roughly 6.5%.
You may also see some focus today on a different figure: 1.6%, which reflects the change between the second quarter and the first quarter.
