US GDP surged 6.5 percent in the second quarter of the year as business reopenings and government aid fueled an ongoing economic recovery from the COVID-19 pandemic
America’s gross domestic product — the value of all goods and services produced here — grew by 6.5 percent from April to June compared with the same period a year ago, the feds said Thursday.
Economists polled by Dow Jones and The Wall Street Journal expected an annualized growth rate of 8.4 percent.
The lackluster economic growth came as businesses across the country opened their doors again after emerging from the depths of the pandemic and as customers flocked to restaurants, airports and stores to spend their money that was saved over the past 16 months.
But the past few months of economic recovery were also hampered by surging inflation, supply shortages and a labor crunch that’s left many businesses struggling to staff up to satiate demand.
Last month, the US managed to add 850,000 new jobs, topping expectations, but that came after months of disappointments as businesses struggled to find adequate workers.
The feds on Thursday morning also released new jobless data that showed initial filings for unemployment benefits, seen as a proxy for layoffs, reached 400,000 last week, down 24,000 from the prior week’s revised level of 424,000, the feds added.
Economists surveyed by Dow Jones expected exactly 380,000 initial claims for unemployment last week.
Weekly new claims have fallen substantially from the 2020 peak of about 6.1 million new claims in a single week.
The week-over-week numbers have inched closer to historical averages over the past couple of months as hiring has picked back up, but last week’s surprise jump in weekly claims had some economists rethinking how soon the US will restore its pre-pandemic labor market.
The week-over-week numbers have inched closer to historical averages over the past couple of months as hiring has picked back up, but last week’s surprise jump in weekly claims had some economists rethinking how soon the US will restore its pre-pandemic labor market.
The country was averaging just over 200,000 new claims per week in 2019.
Earlier this month, the Labor Department reported that US job openings rose again in May, to more than 9.2 million nationwide, indicating there are plenty of open positions.
And a poll published last week by Morning Consult found that more than 1.8 million unemployed Americans have turned down jobs over the course of the pandemic because of the generosity of unemployment insurance benefits.
In a bid to hasten the job market recovery, a handful of states have moved to cut unemployed people off from pandemic-boosted federal unemployment benefits, which give unemployed workers an extra $300 per week.
Many business owners, Republicans and economists have blamed the extra benefits for causing the labor shortage, saying that the unemployment payout keeps workers at home while businesses go understaffed.
In addition to the federal unemployment program, other reasons for the labor crunch include fear of getting COVID-19 and school closures, keeping parents at home, economists say.
Alaska, Iowa, Mississippi and Missouri all ended the federal program on June 12, about three months before it is set to expire.
Another eight states ended the program on June 19, though some of the moves have been tied up in court.
In all, at least 25 states are looking to lure workers back into the labor market by withdrawing from the federal program.