Thursday, July 29, 2021

Gross Domestic Product, Second Quarter 2021, Grows 6.5 Percent

At W.S.J., "U.S. Economy Grows Beyond Pre-Pandemic Level":

U.S. gross domestic product grew at a 6.5% annual rate in the second quarter, up slightly from earlier in the year, pushing the economy’s size beyond its pre-pandemic level.

The growth came as business reopenings and government aid powered a surge that is expected to gradually slow in coming months, with Covid-19 variants and materials and labor disruptions clouding the outlook.

Second-quarter growth fell short of economists’ forecasts. Economists surveyed by The Wall Street Journal estimated that gross domestic product, the broadest measure of goods and services made in the U.S., grew at an 8.4% annual rate in the April-to-June period.

Still, the growth propelled GDP beyond pre-pandemic levels, a milestone that underscores the speed of the recovery that began last summer. Widespread business reopenings, vaccinations and a big infusion of government pandemic aid this spring helped propel rapid gains in consumer spending, the economy’s main driver.

“The economy has come roaring back faster than people expected,” said Jay Bryson, chief economist at Wells Fargo Corporate and Investment Bank.

Economists expect growth to remain strong, fueled by job gains, pent-up savings and continued fiscal support. Still, many say growth likely peaked in the second quarter and will cool as the initial boost from reopenings and fiscal stimulus fades.

Rising inflation, continued supply-chain disruptions and a shortage of available workers are additional factors that could restrain growth. The highly contagious Delta variant of Covid-19 also poses an increasing risk to the economic outlook.

There are two main ways the spread of Delta could derail the robust recovery, economists say. Some state and local governments could reimpose restrictions on businesses. Second, consumers could curtail spending on travel, dining out and moviegoing out of heightened cautiousness toward the variant’s spread.

So far, new restrictions have been limited in scope. They include the reinstatement of indoor-mask rules in some localities such as Los Angeles County. The Centers for Disease Control and Prevention recommended Tuesday that vaccinated people resume masking indoors in places with high or substantial transmission of coronavirus.

Americans don’t appear to be retreating into their homes as the Delta variant spreads. Flight volumes and hotel-occupancy rates continue to rise, according to an analysis of real-time data by Jefferies LLC. Public-transit usage is also gaining ground, though it is down compared with pre-pandemic levels, Jefferies said.

The increasing level of vaccinations in the U.S. has made people more likely to keep working and spending money despite the rise in cases.

“I really don’t expect anything like we saw in the spring of last year,” said Ben Herzon, executive director at forecasting firm IHS Markit. “Going forward we’ll just see how high the case count gets and how nervous some people get.”

Consumer confidence rose in July to the highest level since February 2020, according to the Conference Board. The increase in confidence suggests consumers are positioned to continue driving economic growth this year...

Seems like good news to me.

Still more.