US grows 6.5% in Q2 amid supply bottlenecks

WASHINGTON: The US economy grew at a lower-than-anticipated annual rate of 6.5 per cent in the second quarter, marking the return to an above pre-pandemic level of overall economic activity, the US Commerce Department reported Thursday.

However, the 6.5 per cent gain was considerably less than the 8.4 per cent Dow Jones estimate.

In the first quarter, real GDP increased by 6.3 per cent, 0.1 percentage point less than previously reported, according to the latest data. The US economy contracted a downwardly revised 3.4 per cent in 2020 amid the pandemic.

The increase in real GDP in the second quarter reflected increases in personal consumption expenditures (PCE), non-residential fixed investment, exports, and state and local government spending that were partly offset by decreases in private inventory investment, residential fixed investment, and federal government spending, the Commerce Department report showed. Imports, which are a subtraction in the calculation of GDP, increased.

The GDP data was released one day after the US Federal Reserve signaled that the central bank is inching closer to tapering its asset purchases amid concerns over surging inflation and the rapid spread of the Delta variant of Covid-19.

At a virtual press conference Wednesday afternoon, Powell said US inflation will “remain elevated” in the coming months before moderating to normal levels due to supply bottlenecks.-Xinhua