WASHINGTON—The US economy expanded 6.5 percent annualized in the second quarter, according to government data released Thursday, a far slower recovery from the COVID-19 pandemic than economists had expected.
The gain reported by the Commerce Department meant the world’s largest economy surpassed its pre-pandemic size, climbing above its level in the fourth quarter of 2019 to $19.4 trillion.
The pandemic caused a sharp downturn in the United States last year, with the economy ultimately shrinking 3.5 percent, its worst collapse since modern record-keeping began in 1946.
Massive government spending authorized by Congress as well as vaccinations that allow business activity to recover from COVID-19 are expected to propel the country out of its slump, with the IMF predicting seven percent growth this year.
The rate in the April to June period represented a slight acceleration from the 6.3-percent growth seen in the first quarter, and was driven by increases in consumer spending, exports and local government spending, the report said.
Growth was undercut by the end to a government program to give loans and grants to small businesses, as well as less federal government spending.
The data also showed the personal consumption expenditure (PCE) price index rising 6.4 percent in the second quarter from 3.8 percent in the period before, confirming that inflation is spiking as demand returns from its depressed levels a year ago.
Excluding volatile food and energy prices, the PCE price index rose 6.1 percent.
The growth data gives President Joe Biden a political win as Congress moves closer to passing a long-debated plan to improve the country’s infrastructure.
However the 6.5 percent annualized rate of expansion in the April-to-June period was slower than expected, and the Commerce Department report confirmed that inflation spiked as customers vaccinated against COVID-19 returned to businesses that suffered throughout the pandemic last year.
“Make no mistake: this growth is no accident, it’s a direct result of our efforts to deliver economic relief to families, small businesses, and communities across the country,” the Democratic president tweeted following the release of the data.