US slightly upgrades GDP estimate for last quarter to 6.6%

WASHINGTON – The U.S. system grew astatine a robust 6.6% yearly complaint past quarter, somewhat faster than antecedently estimated, the authorities said Thursday successful a study that pointed to a sustained consumer-led rebound from the pandemic recession. But worries are increasing that the delta variant of the coronavirus is opening to origin a slowdown.

Thursday’s study from the Commerce Department estimated that the nation’s gross home merchandise — its full output of goods and services — accelerated somewhat successful the April-June 4th from the 6.5% it had reported past month. The economy’s enlargement past 4th followed a coagulated 6.3% yearly maturation complaint successful the January-March quarter.

In caller weeks, though, galore economists person been downgrading their estimates of GDP maturation for this quarter, and for 2021 arsenic a whole, arsenic the now-dominant delta variant has sent confirmed COVID-19 cases rising passim the country.

New reported cases are present topping 150,000 a day, the highest level since precocious January. As a consequence, real-time tracking of user activities, notably for hose question and edifice dining, has weakened successful caller weeks.

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Goldman Sachs has chopped its forecast for yearly maturation successful the existent July-September 4th from 9% to 5.5%, citing the effects of the delta variant. Likewise, Wells Fargo economists person downgraded their 3rd 4th GDP forecast from an 8.8% yearly complaint to 6.8%, besides due to the fact that of the surge successful COVID cases.

Some forecasters person besides reduced their outlook for the afloat year, thought by smaller amounts, successful anticipation that the system could re-accelerate successful the last 3 months of 2021 if COVID cases easiness arsenic vaccines are progressively administered.

Mark Zandi, main economist astatine Moody’s Analytics, said helium had downgraded its forecast for yearly GDP maturation this 4th from 8.4% to 6.5%. But helium predicted that GDP volition grow astatine a beardown 6.4% yearly complaint successful the last 3 months of the year.

That would permission maturation for the afloat twelvemonth astatine a brisk 6.1%, which would beryllium the fastest calendar-year enlargement since a 7.2% summation successful 1984. Last year, the system shrank 3.4% arsenic the pandemic-triggered recession wiped retired tens of millions of jobs.

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At the aforesaid time, Zandi cautioned that COVID remains successful his caput the astir superior economical risk.

“The system is linked astatine the hep to the pandemic,” helium said. “So agelong arsenic the pandemic is raging, that volition thrust a batch of what happens successful the economy.”

The uncertainty surrounding COVID is complicating the enactment of the Federal Reserve. The Fed is caught betwixt the risks posed by COVID, which would usually telephone for continued economical enactment from the cardinal bank, and rising inflation, which creates unit connected the Fed to see dialing backmost its ultra-low-interest complaint policies.

Financial markets volition beryllium listening intimately erstwhile Fed Chair Jerome Powell gives a high-profile code Friday greeting arsenic portion of an yearly league of cardinal bankers. The conference, sponsored by the Federal Reserve Bank of Kansas City and usually held successful Jackson Hole, Wyoming, volition alternatively beryllium a virtual-only lawsuit for a 2nd consecutive twelvemonth due to the fact that of rising COVID cases successful Wyoming.

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