U.S. GDP trails forecast even as consumer spending surges
U.S. growth missed forecasts in the second quarter as the effects of supply-chain constraints reverberated through the economy and took the shine off one of the biggest gains in consumer spending in decades.
Gross domestic product grew at a 6.5-per-cent annualized rate after a revised 6.3-per-cent pace in the first quarter, the Commerce Department's estimate showed Thursday.
The report underscores the robust bounceback in household demand as well as the challenges companies are facing keeping pace with that demand. Firms' inability to keep merchandise stocked and bottlenecks in production have capped the speed at which the U.S. pandemic recovery can grow.
“The downside surprise in the GDP numbers is mostly in the inventory component,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note. “We are not disappointed by the headline GDP growth miss.”
The median forecast in a Bloomberg survey of economists called for an 8.4-per-cent increase in GDP. Shepherdson said he expects a big rebound in inventories and is pencilling in third-quarter growth of eight per cent or more.
The S&P 500 rose after the report, the yield on the 10-year Treasury note rose and the dollar weakened on expectations that the figures will encourage the Fed to maintain its support for the economy.
Personal consumption exceeded forecasts as Americans ramped up spending on services such as dining out. Vaccinations, government aid and a broader reopening of the economy helped drive an annualized 11.8-per-cent gain, the second-largest advance since 1952.
The report showed the U.S. economy has recouped its pandemic losses. The inflation-adjusted value of domestically produced goods and services climbed to an annualized US$19.36 trillion, eclipsing its pre-pandemic peak.