America’s economy has officially recovered to its pre-pandemic levels, as Q2 GDP figures saw an annualised increase of 6.5 per cent. This is a positive update, on the face of it, but that’s more or less where the good news stops. The country’s GDP figures have come in notably below the consensus of what was expected, which was something closer to 8.5 per cent.
The news comes just a day after the International Monetary Fund forecast the United States and the UK would lead advanced countries with their rate of economic recovery, revising its estimates for the States upwards to 7.0 per cent this year and 4.9 per cent next year.
Some forecasters remain optimistic, with the CEBR describing the news as evidence of ‘a successful second quarter for the US economy’ and still predicting ‘US GDP growth of 7.0 per cent in 2021’ – similar to the IMF. But others are not as bullish. Capital Economics (CE) reckons there could be a slowing down of America’s GDP growth to ‘3.5 per cent annualised in the second half of this year.’ Other forecasters may follow suit, as the country’s many challenges grow more evident. CE’s chief US economist Paul Ashworth attributes the disappointing figures to a myriad of factors, including the ‘impact from the fiscal stimulus waning, surging prices weakening purchasing power, the Delta variant running amok in the south and the saving rate’ coming in lower than estimated.
Unemployment also remains a problem, as the lack of a US furlough scheme (as implemented in the UK) saw a far greater spike in those out of work, especially at the start of the pandemic.