Gross domestic product grew at a 2% annual rate in the third quarter of 2021, the Bureau of Economic Analysis announced on Thursday morning.
The growth was slower than forecasters expected and was well below the 6.7% pace of growth that the economy experienced in the second quarter of this year. GDP grew at a 6.3% annual rate during the first quarter.
Forecasters expect growth to pick up in the quarters ahead, but the result is a disappointment given the hopes for a continued strong rebound from the pandemic.
“On the less positive side of the data ledger, the annualized gain in third-quarter GDP was 2%, well below the trend earlier in the year,” said Mark Hamrick, Bankrate senior economic analyst. “Even so, that ‘disappointing’ reading is consistent with the U.S. long-term trend, likely only a fairly temporary speed bump caused by the global traffic jam of goods with which we’ve become all too familiar.”
The delta variant of COVID-19, which caused hospitalizations and deaths to climb starting in early July and peaking last month, likely crimped economic growth. Household spending slowed sharply, and many types of business investment also fell.
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While businesses experienced surging demand in the second quarter as more people became vaccinated and restrictions were lifted across the country, the delta surge caused businesses to push back reopening plans, new vaccine and mask mandates to be implemented, and travel plans to be canceled.
Goldman Sachs this month revised down its GDP projection for 2021 from 5.7% to 5.6% after previously cutting it down from 6.2% in September.
The most recent jobs report was disappointing. The economy added just 194,000 new jobs in September as the delta variant held back commerce. The unemployment rate now sits at 4.8%, well above what it was prior to the pandemic.
The worse-than-anticipated jobs report gave further ammunition to economists who think that the country is suffering a labor shortage, a contention that was bolstered by the news that the number of people quitting hit its highest level since the U.S. began keeping records of the statistic two decades ago.
Too-high inflation is also adding to the country’s economic woes.
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Consumer prices rose 5.4% for the year ending September — the highest pace since 2008. Inflation also recently hit the highest level in 30 years in the gauge favored by the Federal Reserve.
The Fed and Biden administration have consistently said that prices will cool off in the coming months, although others, such as former Treasury Secretary Larry Summers, a Democrat, have been sounding the alarm about the rising prices for months.
