The U.S. economy has officially reached pre-pandemic levels in the second quarter, according to the Commerce Department’s latest report. In the second quarter, the economy continued to grow and the gross domestic product has pulled above pre-pandemic peak levels. This is yet another sign that the labor market is continuing to heal.
Economists still forecast that the expected growth will be about 7% for the whole year, which will be the largest growth since 1984. While many analysts at one point thought the U.S. economy’s growth would be the largest seen since the 1950s, this forecast has been tailored again. While the second quarter saw a large surge in consumer demand, struggles have kept the economy from fully bouncing back to what it could. However, the labor market is still in great shape, as some economists worried we wouldn’t get back to pre-pandemic levels until 2022.
According to the Commerce Department, though, the pace of the GDP growth was actually slower than many expected. This is because of the many struggles businesses have faced as they worked to meet the surge in consumer demand earlier this year. As more Americans became fully vaccinated and COVID-19 regulations were taken away, a huge demand for services and goods occurred.
Businesses struggled to meet this demand for various reasons. The nation is still going through massive labor and raw material shortages that haven’t yet been solved. Global supply chain problems also continue to affect the overall stock and inventories for many businesses.
According to the Commerce Department, the GDP increased by about 6.5% last quarter. In the first quarter, the economy grew by 6.3%. Many economists did feel that the second quarter would see a bigger increase. Initially, they forecast the second-quarter growth to be at about 8.5%.
It is expected that the second quarter will hold the peak of the growth for the year. This means that the rest of the quarters, more than likely, won’t reach the growth previously reached. However, many economists still believe that the growth for the year will remain strong and solid. Growth shouldn’t go down too much, and instead, it should stay steady.
However, some forecasts are being tailored, as the COVID-19 pandemic is causing new worries for many. The surge in infections because of the Delta variant of the virus could cause problems for overall expected growth for the rest of the year. Already, the CDC has suggested that fully vaccinated individuals wear masks indoors again to keep the spread of this new variant down. There’s no telling if this, or added regulations, will in any way affect businesses and how people are spending money.
Higher inflation and global supply chain problems could also continue to hamper the overall growth of the economy. Labor market struggles, such as labor shortages, may also continue to negatively impact businesses and how they meet consumer demand. Many of the struggles businesses have dealt with for the past year are still here, but they may finally negatively impact the economy if not somehow dealt with.