Get Breaking Alerts on Stocks Before The Mainstream Media

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We guarantee you to keep your privacy
Connect with us
Financial Press
economic-report:-the-us.-economy-likely-grew-9%-in-the-spring,-gdp-to-show,-but-that-was-before-delta
economic-report:-the-us.-economy-likely-grew-9%-in-the-spring,-gdp-to-show,-but-that-was-before-delta

Breaking

Economic Report: The U.S. economy likely grew 9% in the spring, GDP to show, but that was before delta

The delta variant of the coronavirus has emerged as a new threat, but the U.S. economy sizzled in the spring and repaired much of the harm caused by the Covid pandemic.

Economists polled by The Wall Street Journal forecast an annualized 9.1% increase in gross domestic product in the second quarter — one of the largest growth spurts on record.

Here’s what to watch Thursday when the government reports GDP.

Consumers

Americans spent a ton of money in the spring. Consumer spending — the main driver of the economy — likely rose by 10% or more.

How big is that? Before the pandemic, outlays rose an average of 2.5% a quarter.

The reasons for the splurge are obvious: More people got vaccinated, coronavirus cases declined, government restrictions were lifted and Americans went out again to eat, shop and entertain themselves.

Businesses

Companies are investing heavily for a post-Covid world and they’ve got plenty of business. The big problem has been keeping up with demand. They simply can’t find enough workers or get badly needed supplies on time to produce as much as they are able to sell.

Look for business investment to rise, but don’t expect it to match the torrid double-digit percentage pace in the prior three quarters.

Stockpiled goods

Strong sales and lagging production are likely to result in a big drawdown in inventories — or goods such as autos, computers or canned food stockpiled for future sale. Lower inventories reduce GDP.

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We are Spam free & Secure 🙂

“Firms have a long way to go before they fully replenish the inventories they’ve drawn down this year,” said Will Compernolle, senior economist at FHN Financial.

Housing

Housing is a wildcard. Lots of people want to buy homes, but construction companies can’t build them fast enough. High prices for materials such as a lumber and a shortage of skilled craftsmen are among the biggest obstacles.

Investment in housing could fall for the first time in a year and also partly depress what’s expected to be a stratospheric increase in GDP.

Read: Durable-goods orders rise again even as businesses battle major shortages

Government

Washington approved a $1.9 trillion coronavirus-relief package in the spring and pumped money into the economy. Government spending likely rose around 4% and was another huge contributor to the increase in GDP.

Exports & imports

Chronic U.S. international trade deficits have been a drag on GDP for decades. Yet the increase in U.S. exports might have slightly outpaced imports in the second quarter, making the trade deficit a negligible factor.

Inflation

The cost of living has surged this year and the GDP report is only going to confirm what is already well known. The rate of inflation rose sharply in the spring and likely topped 3% or even more.

Written By

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Breaking

Treasury yields rose across the board on Monday, with the 30-year long bond hovering near the psychologically significant level of 2% and the benchmark...

Breaking

Amazon.com Inc.’s plans for higher wages and a bigger workforce will put pressure on the company’s profit and EBIT, Morgan Stanley says, driving down...

Breaking

Bank stocks have had a good run in 2021, but they still lag behind the broader market’s recovery since the pandemic doldrums of 2020....

Breaking

As Washington teeters closer to a possible government shutdown at midnight Thursday, here’s why the status of the nation’s debt ceiling may ignite more...

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We are Spam free & Secure :)

Get Breaking Stock Alerts

Email address

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address