Today’s report shows that growth in the U.S. economy functionally held steady for the second quarter in a row at a strong pace. The United States economy grew at 6.5 percent at an annual rate in the second quarter of 2021. 1/
The level of real GDP is finally above its pre-pandemic level as the economy has experienced its fastest growth in the first half of the year since 1984. 2/
As consumers increasingly bought services, consumption of services contributed 5.1 percentage points to GDP. This is the most service consumption has ever contributed to GDP, except for the pandemic bounce back in 2020Q3. 3/
Real GDP is still around 2 percent lower than it would have been if it had continued growing at a 2 percent annual rate during the pandemic period. 4/
Real final sales to private domestic purchasers, which removes inventories, net exports, and government, and is less volatile than headline GDP, rose by 9.9 percent annualized in the second quarter, down from 11.8 percent annualized in the first quarter. 5/
GDP growth came in below earlier market expectations. To look at what may have impacted this number, we can use the @AtlantaFed GDPNow “now-cast” to determine how different components of GDP performed relative to one forecast’s projections. 6/
Note that the @AtlantaFed “now-cast,” which uses the most up-to-date data to estimate real GDP growth based on available economic data for the current measured quarter, was for 6.4 percent. 7/
Note that this “now-cast” was revised down yesterday largely in private inventories. In fact, faster inventory drawdowns, likely reflecting pandemic-related supply constraints, shaved 1.1 ppts off of GDP growth. 8/
It is always difficult to forecast, but it is particularly difficult at the moment given the unpredictability of the pandemic economy, as CEA discussed in a previous blogpost: 9/ whitehouse.gov/cea/blog/2021/…
While the @AtlantaFed “now-cast” should not be considered “better” than other forecasters, it is useful because it incorporates the most recent data in order to provide a breakdown of the components of GDP, which not all forecasts do. 10/
Relative to the “now-cast”, government’s contribution to GDP underperformed considerably in the second quarter, as government subtracted almost 0.3 percentage point from GDP, compared to their expectation of over 0.8 percentage point 11/
Government spending was impacted by fewer banks being paid to process and administer Paycheck Protection Program (PPP) loans 12/
On the other hand, consumer spending, nonresidential investment, and net exports all performed better than the @AtlantaFed “now-cast” predicted. 13/
We know that the recovery from the pandemic will not be linear. The Council of Economic Advisers will continue to monitor the data as they come in. /end

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Council of Economic Advisers

Council of Economic Advisers Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @WhiteHouseCEA

13 Jul
Inflation as measured by CPI increased at a 5.4% rate year-over-year last month and 0.9% month-over-month. Core inflation—without food/energy—rose 4.5% year-over-year and 0.9% month-over-month. A large part of the increase is due to cars and pandemic-affected services. 1/ Image
Cars once again accounted for a large share of the increase. Used cars, new cars, auto parts, and car rentals together made up about 60 percent of core month-over-month inflation 2/ Image
Prices of pandemic-affected services rose again this month and contributed 11 basis points to the core inflation increase in June. 3/ Image
Read 8 tweets
6 Jul
New from CEA: we examine previous periods of heightened inflation and see what they can teach us about inflation in 2021. 1/
whitehouse.gov/cea/blog/2021/…
Since World War II, there have been six periods in which inflation—as measured by CPI—was 5 percent or higher: 1946–48, 1950–51, 1969–71, 1973–82, and 2008. 2/
The three most recent inflationary episodes were largely a function of oil shocks; in contrast, pandemic price dynamics have not been primarily driven by oil supply, though we continue to closely monitor ongoing energy price behavior. 3/
Read 17 tweets
2 Jul
Today’s jobs report showed the economy added 850,000 jobs in June, for an average gain of 567,000 over the last three months. This is the fastest monthly job growth since August of last summer. 1/
It is important to pay attention to this three-month moving average to understand the trend, rather than focusing on the data in a single month since monthly numbers can be volatile. 2/ whitehouse.gov/cea/blog/2021/…
Out economy still has not fully recovered as employment remains about 6.8 million jobs below its pre-pandemic level. 3/
Read 24 tweets
1 Jul
To promote a robust economic recovery, the Federal government has been helping needy families through a combination of Federal income support programs, including economic impact payments (stimulus checks) and supplemental unemployment insurance benefits. 1/
A new CEA blog shows that after the extra Federal aid was issued, there were marked improvements in food security among households that reported experiencing financial hardship since COVID-19 began and that were reliant on such funds to meet their recent spending needs. 2/
Although hunger is now on the rise as Federal relief has subsided, additional aid is imminent through the expansion of the Child Tax Credit (CTC), which policymakers expect will once again help to reduce food insecurity. 3/
Read 9 tweets
29 Jun
Job growth volatility has increased during the pandemic and reflects both real volatility—economic reverberations of the pandemic shock—as well as heightened measurement error due to the challenge of collecting statistical data amidst a pandemic. 1/
These considerations warn against placing too much weight on any single data point in assessing the current state of the economy, even as the worst of pandemic in the U.S. fades away. 2/
While this blog focuses specifically on the jobs numbers, increased volatility is not specific to the employment report. In general, economic data during the pandemic and the current recovery have been volatile and challenging to forecast. 3/
Read 31 tweets
17 Jun
This Saturday, the nation recognizes Juneteenth, which marks the day a Major General of the Union Army arrived in Galveston, Texas to enforce the Emancipation Proclamation, and free the last enslaved Black people in Texas from bondage. 1/
The day has evolved into a celebration of emancipation, and while the country acknowledges the progress that has been made, it is imperative to not lose sight of the fact that we still have much work to do to address the vestiges of slavery and historic discrimination 2/
Indeed, policies and practices exist today that are seemingly non-discriminatory on their face but still negatively affect many families of color, especially Black families. Many of these policies and practices have long-term impacts that must be addressed. 3/
Read 14 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

:(