U.S. economy surges past pre-pandemic level

U.S. economic output has surpassed its pre-pandemic level after growing rapidly in the April-to-June quarter, the government announced Thursday.

The nation's gross economic product — the sum of all goods and services produced in the American economy — grew at a robust annualized rate of 6.5% in the second quarter of 2021, as vaccinations and government aid unleashed spending, the Bureau of Economic Analysis said Thursday. 

The quarterly figure was less than analysts had expected, but the economy was likely held back mainly by supply shortages in goods, components and labor.

"The Q2 GDP report marks a key milestone in the recovery as the US economy more than recouped the output lost during the coronavirus recession and likely reached peak growth," economists at Oxford Economics said in a research note. 

The government report provides more confirmation that the economy has mounted a strong recovery from the coronavirus pandemic, which caused the steepest—and shortest—economic contraction on record. 

The nation's employers added 850,000 jobs last month, well above the average of the previous three months. And average hourly pay rose a solid 3.6% compared with a year earlier. Consumer confidence has reached its highest level since the pandemic struck in March 2020, with retail sales remaining solid as Americans shift their spending back to services — from restaurant meals outside the home and airline trips to local entertainment events and shopping sprees. Businesses are also showing renewed faith in the economy, with orders for manufactured goods pointing to solid corporate investment.

"The fundamentals for consumers and businesses are still very good," said Gus Faucher, chief economist at PNC Financial, who said he had so far seen no effects from a rise in confirmed cases of the Delta coronavirus variant.

Still, there are plenty of newly unemployed people seeking help. In a separate report Thursday, the government said that the number of Americans filing for first-time jobless assistance continued to decline. Some 400,000 people applied for unemployment benefits in the week ended July 24, a drop from the prior week.

The weekly applications have fallen more or less steadily this year after peaking at 900,000 in early January, but they remain high by historic standards. Before COVID struck the United States in March 2020, claims were coming in at about 220,000 a week.

As of mid-July, some 13.1 million Americans were receiving some type of unemployment benefits.