The U.S. economy grew in the second quarter at one of the fastest rates in decades but shortages of workers and supplies of crucial products could slow growth for the rest of the year.
The Commerce Department reported Thursday that the nation’s gross domestic product expanded at an annual rate of 6.5% in the last quarter, topping the 6.3% rate in the first quarter and pushing the economy back to its pre-pandemic level, adjusted for inflation.
“That we were able to recover so quickly is astounding,” Beth Ann Bovino, U.S. chief economist at S&P Global Ratings, told the Los Angeles Times.
The recovery has been fueled by trillions of dollars in fiscal aid and consumer spending that jumped at an 11.8% annual rate as more people received COVID-19 vaccinations and businesses reopened.
The GDP growth was the strongest of any quarter since 2003 but analysts had been expecting a gain of 8.4%. In May, economists at the Federal Reserve Bank of Atlanta had projected growth of almost 14%.
“The economy’s second-quarter growth might have been stronger had it not been for supply-chain disruptions and labor challenges that made it difficult for many businesses to keep their shelves stocked and their stores staffed,” The New York Times said.
Despite a red-hot housing market, residential construction fell 2.5 percent as builders struggled to get materials and workers while semiconductor shortages have crimped automobile production.
Robust investment in the quarter signaled that businesses were betting on continued growth and spending on services was strong as widespread vaccinations and falling virus cases led consumers to return to restaurants, nail salons and other in-person activities.
But Nela Richardson, chief economist for payroll processing firm ADP, said the second quarter might stand as a high-water mark for the recovery, when federal aid was still flowing and when vaccinations and the lifting of restrictions gave people an opportunity to spend.
“All the winds were going in one direction, which was to push the economy forward,” she told The New York Times. “The more interesting question is: Where do we go from here?”