The United States (U.S.) economic growth expanded strongly in the second quarter following financial assistance and vaccination programs from the government that spurred increased spending in the services sector.
Gross domestic product (GDP) increased at an annual rate of 6.5% in the second quarter, the Commerce Department reported on Thursday in its preliminary estimate of second -quarter GDP. This second quarter growth reading is much higher than the first quarter growth reading which recorded a reading of 6.3%.
However, the second quarter GDP figure was far from the expected target of 8.5%. Waima, economic growth continues to grow rapidly despite the emergence of the Delta variant. On the other hand, inflation continues to rise higher. If this continues it could disrupt the supply chain and at the same time slow down the economy.
The Fed in early Thursday morning kept its benchmark overnight interest rate near zero and also maintained bond purchases. The Chairman of the Fed, Jerome Powell stressed that the impact of the Covid-19 contagion on the economy is diminishing.
Economists expect growth of around 7% this year, which is the best performance since 1984. The International Monetary Institution on Tuesday raised its growth forecast for the United States to 7.0% in 2021 and 4.9% in 2022.
A separate report from the Department of Labor on Thursday showed initial claims for state unemployment benefits fell by 24,000 to 400,000 for the week ending July 24.
