US ECONOMY SURPASSES PRE-PANDEMIC SIZE WITH 6.5% Q2 GROWTH

Fueled by vaccinations and government aid, the U.S. economy grew at a solid 6.5% annual rate last quarter in another sign that the nation has achieved a sustained recovery from the pandemic recession. The total size of the economy has now surpassed its pre-pandemic level.

Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product — its total output of goods and services — accelerated in the April-June quarter from an already robust 6.3% annual growth rate in the first quarter of the year.

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.