July 29, 2021 11:41 AM | Jorge A. Bañales .
15 minutes. The Gross Domestic Product of the United States (USA) grew by 1.6% in the second quarter, placing the annualized growth rate of the economy at 6.5%, its highest value since before the COVID-pandemic. 19.
The Bureau of Economic Analysis (BEA) published the first of its 3 GDP calculations on Thursday. According to their estimates, the US economy grew 12.2% over the second quarter of 2020, when the pandemic caused a serious contraction in activities.
These figures demonstrate the strong recovery rate of the world’s leading economy.
The value of economic activity now exceeds pre-COVID-19 levels. This reflects the impact of business reopening, vaccinations, government stimulus programs, and the generous monetary policy of the Federal Reserve (FED).
But the annualized data disappointed most analysts, who expected this rate to be around 8.4%.
Consumer spending, which is the main engine of growth, jumped in that quarter at an annualized rate of 11.8%. To a large extent, stimulated by the profit distributions made by the Government.
The BEA report shows that US GDP per capita is now $ 53,748, compared to $ 55,886 in 2019, the highest on record.
The “stimulus packages” enacted by Presidents Donald Trump and Joe Biden brought the US economy back to its pre-crisis value much faster than in the recessions of 1980, 1990, 2001 and 2007.
GDP, battered by the pandemic, took only 4 quarters to return to its previous value. On the other hand, after the Great Recession of 2007-2009, the country struggled for almost 2 years to fully recover.
One effect of the stimuli is the rise in prices. According to BEA data, was 6.4% between April and June, compared to 3.8% in the previous quarter.
The latest monthly inflation rate published is that of June and stood at 5.4%, the highest in 13 years. The FED decided this Wednesday to keep interest rates between 0% and 0.25%. You keep thinking that high inflation will be temporary.
The economic reactivation now encounters different factors that lead analysts to expect at least one decrease in growth rate.
The unemployment rate fell from more than 14% in April 2020 to 5.9% in June. However, it is still above the 3.5% pre-pandemic.
The number of applications for unemployment benefits, which jumped to 6.8 million in the last week of March 2020, has dropped gradually and significantly, but for several weeks it has already been stagnant at around 400,000, double the number of procedures in weeks prior to the pandemic.
Vaccination against COVID-19, which progressed vigorously from December to May, has met resistance from at least a third of the population. The contagions have accelerated again, especially for the delta variant, which has reopened the debate on prevention measures.
Fed President Jerome Powell warned on Wednesday that the delta variant of the coronavirus could have fewer implications for the economy if it repeats the previous spread patterns of COVID-19.
Although he pointed out that we will have to wait to see what happens, he considered that possibly, this time, there will be no significant closures of activities.