U.S. slightly upgrades GDP estimate to 6.6%
WASHINGTON — The U.S. economy grew at a robust 6.6 percent annual rate last quarter, slightly faster than previously estimated, the government said Thursday in a report that pointed to a sustained consumer-led rebound from the pandemic recession. But worries are growing that the delta variant of the coronavirus is beginning to cause a slowdown.
Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product — its total output of goods and services — accelerated slightly in the April-June quarter from the 6.5 percent it had reported last month. The economy’s expansion last quarter followed a solid 6.3 percent annual growth rate in the January-March quarter.
In recent weeks, though, many economists have been downgrading their estimates of GDP growth for this quarter, and for 2021 as a whole, as the now-dominant delta variant has sent confirmed COVID-19 cases rising throughout the country.
Goldman Sachs has cut its forecast for annual growth in the current July-September quarter from 9 percent to 5.5 percent, citing the effects of the delta variant. Likewise, Wells Fargo economists have downgraded their third quarter GDP forecast from an 8.8 percent annual rate to 6.8 percent, also because of the surge in COVID cases.
Some forecasters have also reduced their outlook for the full year, thought by smaller amounts, in anticipation that the economy could re-accelerate in the final three months of 2021 if COVID cases ease as vaccines are increasingly administered.
Mark Zandi, chief economist at Moody’s Analytics, said he had downgraded its forecast for annual GDP growth this quarter from 8.4 percent to 6.5 percent. But he predicted that GDP will expand at a strong 6.4 percent annual rate in the final three months of the year.
That would leave growth for the full year at a brisk 6.1 percent, which would be the fastest calendar-year expansion since a 7.2 percent gain in 1984. Last year, the economy shrank 3.4 percent as the pandemic-triggered recession wiped out tens of millions of jobs.
At the same time, Zandi cautioned that COVID remains in his mind the most serious economic risk.
“The economy is linked at the hip to the pandemic,” he said. “So long as the pandemic is raging, that will drive a lot of what happens in the economy.”