The quick growth the United States economy saw stands for hit a wall

A National Park Service worker replaces a flag at the Washington Monument, which reopened today following a six closing of the month due to COVID-19 safety measures, in Washington USA, July 14, 2021.

Kevin Lemarque | Reuter

The United States economy expected post another roar growth click in the second quarter, before a slow and steady dose of reality begins to sink in.

Gross domestic product is expected to accelerate by 9.2% for the April-June period, according to a FactSet survey. The Commerce Department will release yours first esteem for second-quarter GDP on Thursday.

In a pre-pandemic world, which he would put annualized growth at its fastest level since second quarter of 1983. However, the current circumstances and outsize policy response they generated make this only the third straight quarter of GDP which is well above the post-Great trend of recession.

However, things are about to change.

The economy is crawling back towards normality, the checkbook opened by Congress is about to get tighter, e millions of the sidelined American workers will return to their jobs. This means a gradual return to media for a economy more used to growing closer to 2% than the much stronger levels it has reached in during reopening.

“Growth peaked, on, economy will slow down a little in the second half of this year, then a lot more remarkably in the first half of 2022 as a tax support fades away, “said Mark Zandi, chief economist for Moody’s analysis. “The side dishes of growth will be modeled in much of it from the budget policy over the next 18 months. The wind in stern just blows less strongly ea quest’now it could stop altogether next year. “

It was a long way to get here, but the economy it came very close to its pre-pandemic self.

In fact, according to an indicator that Jefferies holds, overall production is 98.6% of its “normal” level before Covid-19 turned everything upside down down. The company uses a slew of indicators to be measured then compared to today, and notes that while some areas such as employment and air trips are in delay, retail and housing helped push overall activity towards just below the level of 2019, at 98.6%.

“When I look in holistic way to family income dynamics and budgets, I see a very, very positive situation, very healthy fundamentals, and it is hard be pessimistic on the prospects, ”said Aneta Markowska, chief financial economist at Jefferies.

Indeed, family net worth it totaled $ 136.9 trillion at the end of the first quarter, a 16% increase from the 2019 level, according to the Federal Reserve. At the same time, family debt payments over personal disposable income fell to 8.2%, a record going low back to 1980.

But much of That net worth it was driven by increases in financial assets like stocks, and personal income increased due to government stimulus payments that are slowing and will eventually stop.

Demographic possession back growth

keeping up so quick pace of growth will be difficult in a economy which has long been held back from aging population and poor productivity. These problems will be exacerbated by the decrease policy support as well as a continuum battle against Covid-19 and its variants, although few economists expect widespread blockages and the dip in activity that took place in early-mid 2020.

“What we see is a economy in strong above-trend growth albeit at a slower pace pace until 2023, “said Joseph Brusuelas, chief economist at the consulting firm RSM.” In the absence of any productivity improvement policy support, eventually we will move back to the trend because there isn’t much we can do about the demographic headwinds, which will eventually drag on growth back in the long run-term trend.”

but there is also are shorter-term headwinds that should temper the gaudy ones growth numbers.

An aggressive shot of inflation brought on by huge and supply constraints demand linked to the economic reopening will be hit production. While many economists, including those at the Federal Reserve, are willing to write off inflation as temporary with wheelie used auto And truck contributing prices in to a large extent, officials including Treasury Secretary Janet Yellen have warned that the price the increases are likely to continue for at least several months.

Gasoline prices in a Royal Dutch Shell Plc service station in San Francisco, California, United States, on Wednesday 7 July 2021.

David Paul Morris | Bloomberg | .

Combined inflation with tax in fade support also then it will serve as a growth limit.

“The economy is facing supply constraints with residential investment likely a drag and change in negative inventories “, Bank of American economist Alexander Lin said in a note. “Looking ahead, this is probably the peak, with growth cooling down in the next quarters “.

Capital economy forecasts a below-consent 8% of GDP for the second quarter, then a drop at 3.5% in the next period.

“With the price hike real income we suspect pace of monthly growth want remain lackluster, setting the stage for a sharp slowdown in consumption and GDP growth in the third quarter”wrote Paul Ashworth, North American chief economist at Capital Economics.

The pandemic is another wild card.

cases of delta variants are increasing in a handful of states and health officials fear the United States might face a wave like the one hit some Europeans and Asians and countries. Few economists expect another wave of blocks or similar constraints in the United States, but pressure from abroad could hit domestic growth.

“Export platforms like Vietnam is blocked down now, “said Brusuelas.” Vietnam is becoming a more important gear in the global supply chain, so we are watching it closely.

Brusuelas added that negotiations over the debt ceiling also he might tremble up the things in US Yellen said Friday that the US can take extraordinary measures need take to continue paying his debts could hit trouble like soon like October.

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