A report released by the Commerce Department on Thursday showed a significant increase in U.S. gross domestic product in the second quarter of 2021, although the pace of growth fell short of economist estimates.
The Commerce Department said real GDP surged up by 6.5 percent in the second quarter following a 6.3 percent jump in the first quarter. Economists had expected GDP to spike by 8.5 percent.
The GDP growth in the second quarter reflected increases in consumer spending, non-residential fixed investment, exports, and state and local government spending.
The report showed consumer spending skyrocketed by 11.8 percent in the second quarter after soaring by 11.4 percent in the first quarter.
However, decreases in private inventory investment, residential fixed investment, and federal government spending limited the upside along with an increase in imports, which are a subtraction in the calculation of GDP.
“The good news is that the economy has now surpassed its pre-pandemic level,” said Paul Ashworth,
Chief U.S. Economist at Capital Economics.
He added, “But with the impact from the fiscal stimulus waning, surging prices weakening purchasing power, the delta variant running amok in the south and the saving rate lower than we thought, we expect GDP growth to slow to 3.5% annualized in the second half of this year.”
The report also showed core consumer prices, which exclude food and energy prices, spiked by 6.1 percent in the second quarter after jumping by 2.7 percent in the first quarter.