The U.S. economy rose disappointingly in the second quarter, a sign that the U.S. has escaped the shackles of the Covid-19 pandemic but still has more work to do, the Department of Commerce reported Thursday.
The gross domestic product, a measure of all goods and services produced between April and June, rose by 6.5% on an annual basis. That was slightly better than the 6.3% increase in the first quarter, which was revised slightly downwards.
While that would have been strong before the pandemic, the gain was well below the 8.4% Dow Jones estimates.
Private gross inland investment declined 3.5% as the decline in private inventory and housing investment dampened profits. Rising imports and a 5% decline in government spending despite the skyrocketing budget deficit were also a factor, according to the Bureau of Economic Analysis report.
The overall increase is due to increasing personal spending, which increased 11.8% as consumers accounted for 69% of all activity. Fixed investment, exports, and state and local government spending also contributed to the increase in output.
The gain was also a measure of how far the economy has come from the closings imposed in the early days of the pandemic, when the government shut down large parts of economic activity across the country to fight the spread of Covid-19.
At its lowest point, the economy slumped 31.4% in the second quarter of 2020; it recovered 33.4% in the following three months and has since moved towards normal.
In the years leading up to the pandemic, the growth in the second quarter would have been the strongest since the third quarter of 2003.
Although production has remained below pre-pandemic levels, the National Bureau of Economic Research stated that the recession that began in February 2020 ended just two months later, the shortest on record.
Nonetheless, areas of the economy remain under water, as the labor market in particular is struggling to return to normal.
A separate data point reported Thursday showed that 400,000 people were making initial claims for unemployment benefits for the week ending July 24. This level is almost double the pre-pandemic norm and was above the Dow Jones estimate of 380,000.
This is the latest news. Please check back here for updates.
Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign up to start a free trial today.