The U.S. said Thursday that its economy, the world’s largest, advanced 6.5% in the April-to-June period, a slightly faster annualized pace than in the first three months of the year as the country steadily regains its footing from the economic devastation of the coronavirus.
The size of the U.S. economy – nearly $23 trillion – now exceeds its pre-pandemic level as it recovers faster than many economists had predicted during the worst of the business closings more than a year ago.
The surging delta variant of the coronavirus is now threatening to impair business activity in some regions of the U.S. and, as a result, analysts say the economy could cool somewhat in coming months.
But the second quarter growth was fueled with widespread business reopenings, vaccinations for millions of people and trillions of dollars in government pandemic aid that was sent to all but the wealthiest American families.
That set of circumstances helped push rapid gains in consumer spending, which accounts for 70% of the U.S. economy. The April-to-June figure, the Commerce Department said, was a tenth of a percentage point higher than the 6.4% January-to-March advance.
White House press secretary Jen Psaki said second quarter economic growth is “further proof of the remarkable progress we’ve made in jump-starting our economy from one of the darkest moments in its history. … We’ve grown our economy the first half of this year at the fastest rate in almost four decades, created 3 million new jobs, and halved new jobless claims.”
Yet she acknowledged, “We still have work to do to build our economy back better, and we can’t be complacent when too many Americans are still facing the squeeze of economic uncertainty.”
Meanwhile, the Labor Department reported Thursday that 400,000 jobless workers made first-time claims for unemployment insurance last week, down 24,000 from the revised figure of the week before.
The new weekly jobless claims figure is in line with the number of claims in recent weeks but remains well above the 256,000 total recorded just before the coronavirus waylaid the American economy 16 months ago and closed many U.S. businesses.
The weekly claims total has tracked unevenly in recent weeks, but overall, jobless claims, a proxy for layoffs of workers, have fallen by more than 40% since early April, while remaining well above the pre-pandemic levels.
About 9.5 million people remain unemployed in the U.S. and looking for work. There also are 9.2 million job openings, the government says, although the skill sets of the jobless do not necessarily match the needs of employers.
The U.S. added 850,000 jobs in June, with the unemployment rate at 5.9%. Some employers are offering new hires cash bonuses to take jobs as the economy rebounds and consumers are willing to spend.
State governors and municipal officials across the U.S. have been ending coronavirus restrictions, in many cases allowing businesses for the first time in a year to completely reopen to customers. That could lead to more hiring of workers.
More than 60% of U.S. adults have now been fully vaccinated against the coronavirus, boosting the economic recovery.
Currently in the U.S., the delta variant of the coronavirus is spreading rapidly, infecting tens of thousands of people who have not been vaccinated. The U.S. Centers for Disease Control and Prevention this week said that even people who are fully vaccinated should wear face masks again in indoor public settings in parts of the country where the number of new infections is surging, setting the stage for new conflicts with state and local officials who want a full return to normal life.
Officials in many states are offering a variety of incentives to entice the unvaccinated to get inoculated, including entry into lucrative lotteries for cash and free college tuition but millions of people remain resistant to getting the shots. The U.S. did not meet President Joe Biden’s goal of 70% of adult Americans with at least one vaccination shot by the July 4 Independence Day holiday. The figure now stands shy of that at 69.3%, with Biden and health officials almost daily urging people to get vaccinated if they haven’t been already.
With the business reopenings, many employers are reporting a shortage of workers, particularly for low-wage jobs such as restaurant servers and retail clerks. Biden suggested last week at a CNN town hall with voters in Ohio that employers having trouble finding enough workers may simply need to offer would-be workers more money to get them to agree to accept a job opening.
The federal government approved sending $300-a-week supplemental unemployment benefits to jobless workers through early September on top of less generous state-by-state payments.
But at least 25 of the 50 states, all led by Republican governors, are ending participation in the federal payments program, contending that the stipends let workers make more money than they would by returning to work and thus are hurting the recovery by not filling available job openings.
Some economists say, however, other factors prevent people from returning to work, such as lack of childcare or fear of contracting the coronavirus as the delta variant first found in India infects more people.
The economic picture in the U.S. has advanced as money from Biden’s $1.9 trillion coronavirus relief package filters through the economy. The measure has likely boosted consumer spending, as millions of Americans, all but the highest wage earners, are now receiving $1,400 stimulus checks from the government or have already been sent the extra cash.
With more money in their wallets and more people vaccinated, Americans are venturing back to some sense of normalcy, going out to restaurants and spending money on items they had not purchased for a year. But how the new surge in coronavirus cases affects the economy is uncertain.