Washington, July 30 (TIWN) The US economy grew at a lower-than-anticipated annual rate of 6.5 per cent in the second quarter, marking the return to an above pre-pandemic level of overall economic activity, the Commerce Department reported.

In the first quarter, real GDP increased by 6.3 percent, 0.1 percentage point less than previously reported, according to the latest data. The U.S. economy contracted a downwardly revised 3.4 percent in 2020 amid the pandemic. 

Jason Furman, former chairman of the White House Council of Economic Advisers, said on Twitter that the 6.5 percent annual growth rate in the second quarter means that real GDP is now above its pre-pandemic level, but still below its trend.  Noting that there is still an "output gap," Jay Bryson, chief economist at Wells Fargo Securities, said in an analysis that output is still 2.5 percent below where it would have been had the pandemic never happened. 

The increase in real GDP in the second quarter reflected increases in personal consumption expenditures (PCE), non-residential fixed investment, exports, and state and local government spending that were partly offset by decreases in private inventory investment, residential fixed investment, and federal government spending, the Commerce Department report showed. Imports, which are a subtraction in the calculation of GDP, increased. 

The decline in inventories translated into a 1.1 percentage point drag on overall GDP growth, Bryson noted. "The sizable decline in inventories over the past two quarters reflects strong growth in spending in conjunction with supply shortages that have hampered production," he said.