Reuters.- The United States (US) economy had strong growth in the second quarter, but the pace was lower than expected, as strong consumer spending and business investment in equipment was offset by a sharp fall in inventories in the face of the supply chain constraints.
The Gross Domestic Product (GDP) grew at an annualized rate of 6.5% last quarterthe Commerce Department said Thursday. The economy grew at a 6.3% rate in the first quarter, revised down from the 6.4% rate previously reported.
The forecast was that GDP would increase at a rate of 8.5% last quarter.
With the second quarter estimate, the government released revisions to GDP data, which showed that the economy contracted by 3.4% in 2020, instead of 3.5% as previously estimated, still the biggest drop in GDP since 1946.
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Growth revisions in other years and quarters were minor. From 2015 to 2020, GDP increased at an average annual rate of 1.1%, without revising previously published estimates.
The National Bureau of Economic Research, the arbiter of recessions in America, declared last week that the pandemic recession, which began in February 2020, ended in April 2020.
Even with the second quarter marking the peak of growth in this cycle, economic expansion is expected to remain solid for the rest of this year.
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However, a resurgence of Covid-19 infections poses a risk to prospects. Higher inflation, if it continues, as well as continued supply chain disruptions could also slow the economy.
Consumer spending, which represents more than two-thirds of the US economy, grew at a rate of 11.8% in the second quarter, driven by demand for services.
A separate report from the Labor Department showed that initial claims for state unemployment assistance fell by 24,000 to 400,000 seasonally adjusted for the week through July 24. Economists polled by Reuters had forecast 380,000 orders.
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