The quarterly figure was less than analysts had expected. But that was mainly because supply chain bottlenecks exerted a stronger than-predicted drag on companies’ efforts to restock their shelves. The slowdown in inventory rebuilding, in fact, subtracted 1.1 percentage points from last quarter’s annual growth.
By contrast, consumer spending — the main fuel of the U.S. economy — was robust last quarter: It advanced at an 11.8% annual rate. Spending on goods grew at an 11.6% rate, though down from a 27.4% surge in the first quarter. And spending on services, from restaurant meals to airline tickets, expanded at a 12% rate, up from a 3.9% gain in the JanuaryMarch period as vaccinations encouraged more Americans to shop, travel and eat out.
For all of 2021, the economy is expected to expand perhaps as much as 7%. If so, that would be the strongest calendar-year growth since 1984. And it would mark a sharp reversal from last year’s 3.4% economic contraction — the worst in 74 years — as a result of the pandemic.
Despite the lower-than-expected second-quarter growth, Lydia Boussour, lead U.S. economist at Oxford Economics, still foresees solid gains ahead, with growth of around 7% for all of 2021.
“We expect the economy to carry strong momentum into 2022, with growth underpinned by strong consumer and corporate fundamentals,” Boussour said.
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