US GDP updates
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US economic growth is expected to have accelerated in the second quarter thanks to a rise in consumer spending, despite possible headwinds from supply chain disruptions and a resurgence in Covid-19 cases.
Data from the US commerce department is expected to show gross domestic product advanced 8.5 per cent on an annualised basis in the second quarter, according to economists polled by Refinitiv.
That would put GDP back above its pre-pandemic level for the first time since Covid-19 struck, and mark the fastest growth since 1983, excluding a 33.4 per cent jump in the third quarter last year when the economy emerged from an initial wave of pandemic-related lockdowns.
GDP growth is expected to reach 2.1 per cent compared with the previous quarter, based on the measure used by other big economies. The report is scheduled for release at 8:30am Eastern time on Thursday.
A surge in vaccinations from April to June boosted the US economy and unleashed pent-up demand that was further aided by large fiscal and monetary stimulus measures.
“Consumers are in the driver’s seat in terms of economic activity,” said Gregory Daco, an economist at Oxford Economics. While growth is expected to have peaked, the US economy is still projected to expand at a moderate clip in the second half of the year.
Labour shortages, supply chain disruptions and inflation have all been flagged as factors that could weigh on economic activity, along with a resurgence of Covid-19 in some parts of the country.
Biden administration officials have expressed concerns over the highly transmissible Delta variant and its effect on the economy. The Federal Reserve on Wednesday said “the path of the economy continues to depend on the course of the virus”.
And in recent weeks, federal and local officials have redoubled efforts to boost vaccination rates among those hesitant to get the shot.
The Centers for Disease Control and Prevention backpedalled on its mask guidance for vaccinated people this week, and a number of state and city governments, along with employers such as Google, have begun to mandate vaccinations or weekly testing for employees returning to in-person work.
“The most vulnerable part of the economy from another Covid wave is services, in particular leisure activities,” said Stephen Juneau and Anna Zhou, economists at Bank of America, in a note. They cautioned that if pandemic restrictions return and spending on services dips, a boom in spending on goods is unlikely to offset that decline as stimulus payments fade.