Second Quarter GDP Growth Comes in Well Below Expectations

July 29, 2021

The U.S. economy grew at a robust pace last quarter but still disappointed. Gross domestic product, which measures all of the goods and services produced, grew by 6.5% in the period between April and June. That is better than the growth seen during the first quarter, which was revised downward slightly to 6.3%.

While this would have been strong growth in the period prior to the pandemic, economists had expected a flurry of economic activity amid the reopening to drive growth higher. Dow Jones estimated growth of 8.4%, though some analysts expected growth could reach as high as 10%.

The Bureau of Economic Analysis attributes the lower-than-expected performance to declines in private domestic investment, rising imports, and a 5% decline in government spending.

The increase was thanks to strong consumer spending, which accounts for nearly 70% of all economic activity. However, all that consumer spending caused the personal savings rate to plummet, falling to $1.97 trillion from $4.1 trillion. 

Growth was already expected to slow in the third quarter, but the spread of the Delta variant of the coronavirus has some economists concerned that growth may moderate further and that the full-year GDP growth may disappoint.

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