GDP Report Shows Economic Recovery Moving Along, But Delta Variant Fears Linger
The U.S. Gross Domestic Product increased at an annual rate of 6.6% in the second quarter of 2021, according to a new release by the Bureau of Labor Statistics this morning, coming in slightly higher than what economists had predicted.
Increases in spending in the categories of personal consumption expenditures, nonresidential fixed investment, exports, and state and local government contributed to the increase in the second quarter GDP. Personal consumption increases were led by food services and accommodations and goods, most notably pharmaceuticals, clothing and footwear.
These increases suggest a positive trajectory in the ongoing economic recovery. As people start to emerge and schools reopen, the retail sector enjoyed a strong quarter.
Key factors driving the growth in the pharmaceutical market are increased spending in research and development, a rise in focus towards healthcare for both industrialized and emerging nations, an increase in the geriatric population, and a subsequent increase in the incidence rate of chronic disorders.
The decrease in federal government spending was primarily a result of a decrease in the processing and administration of Paycheck Protection Program (PPP) loan applications by banks on behalf of the federal government.
Increases were offset by decreases in private inventory investment, residential fixed investment and federal government spending. Additionally, an uptick in imports offset increases, which is an overall subtraction against the calculation of GDP.
Although the GDP figures show a slight increase over last month’s increase, the Delta variant of the coronavirus is still worrying analysts. Goldman Sachs has cut its forecast for annual growth in the July-September quarter from 9% to 5.5%, citing Delta variant concerns. Similarly, Wells Fargo economists downgraded their third quarter GDP forecast from an 8.8% annual rate to 6.8%, also due to COVID-19 cases surges, AP News reports.
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