US Economy Grows 1.6% in Q2 2021, Challenges Remain

The United State’s gross domestic product grew 1.6% in Q2 of 2021, the latest indication of an economic rebound that could be undermined by the COVID-19 Delta variant.

As federal aid and rising vaccination rates fueled an increase in consumer spending at restaurants, hotels, and retail stores throughout the spring months, the US economy managed to reverse some of the damage done by the economic meltdown brought on by the pandemic.

The revival helped gross domestic product bounce back to its pre-pandemic level in Q2, adjusted for inflation. This is a major achievement, as it took place no more than a year after the economy’s worst quarterly plunge on record. For comparison, after the previous recession ended in 2009, the GDP took approximately two years to fully rebound.

“The good news is, this is all occurring much more rapidly than after the financial crisis. The bad news is, the pain was much worse”,  said Grant Thornton’s Diane Swonk, chief economist for the accounting firm. 

However, as the new variant of the coronavirus spreads fast, it could threaten those gains, especially because the curtain is falling on the federal aid programs and business loans that supported the recovery.

According to the statement released by the Department of Commerce, US GDP grew 1.6% in the second quarter of the year, up from 1.5 % in the first three months of 2021. On an annualized basis, Q2 growth amounted to 6.5%.

The second quarter saw robust investment undertakings, which indicated that businesses were expecting continued growth. However, there’s still a long way to complete recovery. Several economic measures remain depressed, and output is still significantly below the level it would have reached if growth had stayed on its pre-COVID-19 path. Furthermore, the US labor market now has seven million fewer jobs than it had before the global health crisis.