BlackRock Investment Institute

Macro insights

U.S. GDP surpasses pre-pandemic level

The U.S. economy grew slightly faster in the second quarter than in the previous quarter, but below the consensus forecast. U.S. GDP, which grew at an estimated 6.5% pace in Q2, is projected to have now surpassed its pre-pandemic level, meaning the overall GDP shortfall will be only a fraction of that of the global financial crisis (GFC). See the chart.

Restart, not a recovery

Chart showing U.S. GDP surpassing its pre-pandemic level

Sources: BlackRock Investment Institute, with data from the U.S. Bureau of Economic Analysis and the National Bureau of Economic Research (NBER), July 2021. Notes: The chart shows the level of U.S. GDP during recessions since 1953. The level of GDP is indexed to 100 in the quarter prior to the start of each recession using the NBER definition of U.S. business cycles and expansions. The grey band shows the range of GDP levels reached at each subsequent quarter after the recession starts between 1953 and 1990.

We see this as further confirmation that we are witnessing a restart, not a typical business cycle recovery – and any misses of expectations should be understood in that context. A look under the hood reveals clear restart dynamics: services activity was resuming and consumer spending actually exceeded expectations, growing by nearly 12% on the year. The rapid restart puts us in a very different position compared with after the GFC. Fiscal stimulus and easy monetary policy have provided a bridge through the pandemic, avoiding a long, sluggish recovery and permanent hit to growth like we saw after the GFC. Under its new framework, we see the Fed unwinding the ample monetary accommodation much more slowly than in the past.

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Restart, not a recovery
U.S. GDP surpasses its pre-pandemic level, meaning the overall GDP shortfall will only be a fraction of that of the global financial crisis.
Elga Bartsch
Head of Macro Research
Read bio
Nicholas Fawcett
Macro Research

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