Economic growth revised up slightly to 6.7% year-on-year in the second quarter
U.S. gross domestic product grew at an annualized rate of 6.7% in the second quarter of 2021, a final estimate from the Bureau of Economic Analysis was released on Thursday morning. The slight upward revision of a tenth of a percentage point indicates that economic growth from April to June was heading in the right direction after last year’s pandemic-induced recession.
The numbers are a flip-flop from the same period a year ago, when the economy stagnated and plunged a record 31.4%.
Accommodation and food services were the main engine of growth, while retail trade and transportation and warehousing posted declines.
The news comes on the same day as the weekly unemployment report, which was even worse than expected. While GDP has grown at a steady pace, the labor market is lagging behind and the unemployment rate is still far higher than it was before the pandemic.
“Surprise negative warning: New jobless claims rose for the third week in a row, from 11,000 to 362,000. The latest increase has clouded hopes of improvement,” said Mark Hamrick, senior economic analyst at Bankrate.
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The first quarter of this year also saw tremendous growth, with economic growth of 6.4%, vaccines becoming more accessible and businesses starting to see consumers start to return.
Economic growth has been largely driven by a return of the retail, service and hospitality sectors, which plunged at the height of the pandemic amid consumer fears of contracting COVID-19 and government restrictions on business.
Despite growth in the second quarter, GDP estimates for the rest of the year have been revised down by the Federal Reserve and economists due to the surge in cases of the delta variant, which began this summer.
The central bank recently reduced its GDP forecast from 7% in 2021 to 5.9% and reduced its growth forecast from 3.8% to 3.3% for next year in light of the effect that the new pressure has on the economy.
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Goldman Sachs also recently downgraded its 2021 GDP forecast from 6.2% to 5.7%, and Wells Fargo also cut some of its GDP forecast.