"US Economy Peaks in Q2 and Growth Slows Down from Second Half"

GDP 9.1% Growth Forecast
Effect of Vaccine and COVID-19 Support Funds Fades

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] There are predictions that the U.S. economy, after peaking in the second quarter of this year, will see a slowdown in growth starting in the second half.

The Wall Street Journal (WSJ) reported on the 18th (local time), citing expert analyses, that the U.S. economy is expected to stabilize from the second half of this year.

Earlier, the U.S. GDP for the first quarter of this year recorded a 6.4% increase compared to the same period last year.

Experts forecast a growth rate of 9.1% in the second quarter, which would be the highest since 1983, except for last summer.

They also expect the U.S. GDP to recover to pre-COVID-19 levels in the second quarter of this year.

However, WSJ reported that the general consensus among experts is that after peaking in the second quarter, the economy will enter a downward phase starting in the second half.

Growth is predicted to be 7% in the third quarter of this year and fall to 3.3% by the second quarter of next year, indicating a slight contraction in economic expansion. The annual economic growth rate is also expected to decline from 6.9% this year to 3.2% next year.

WSJ analyzed that this is because the effects of business reopenings that drove explosive economic growth earlier this year, expanded vaccination, and government COVID-19 relief payments will fade.

Ellen Zentner, an economist at Morgan Stanley, said, "We now believe we have passed the peak of the economic cycle," adding, "We are entering a phase where economic expansion will further moderate."

However, experts do not see this as signaling a recession.

With millions of citizens who lost jobs during the COVID-19 pandemic actively seeking employment, the increase in income from their employment is expected to boost consumption, supporting continued economic growth.

Additionally, analyses show that citizens' annual average savings as of May are double those of May 2019, indicating that consumer spending power remains strong.

Furthermore, since the federal government began providing up to $300 per minor child to low-income households starting on the 15th, this is also expected to stimulate consumer sentiment.

However, WSJ added that inflation factors such as rising housing prices still exist, and concerns about demand-supply imbalances in the labor market persist as employment rates have not fully recovered to pre-pandemic levels, posing risks during the economic recovery process.

This content was produced with the assistance of AI translation services.