The American economy is larger than it was before the pandemic thanks to huge stimulus efforts and widespread vaccination, but growth in the second quarter still failed to live up to analysts’ expectations.
The US economy is enjoying a strong, consumer-led recovery thanks to the government’s $1.9 trillion stimulus package. Output is back above its pre-Covid level for the first time, having grown by 6.5 per cent between April and June. This was up from 6.4 per cent in the first quarter, according to the commerce department.
Inflation is rising rapidly in the United States, but the central bank is against tightening monetary policy too soon because it believes that the jump will be brief. Figures released yesterday showed that the personal consumption expenditures index, which is watched closely by the Fed, had increased by 6.4 per cent in the second quarter, up from 3.8 per cent in the first quarter.
Oliver Gatland, at the Centre for Economics and Business Research, said: “The Fed claims that the current elevated level of inflation is largely reflecting transitory factors and that longer-term inflation expectations remain ‘well anchored’ at 2 per cent.”