Updated Jul 29, 2021 - Economy

U.S. economy grew at a 6.5% rate last quarter, missing expectations

Contractors work on a home under construction in Sumter, South Carolina, U.S., on Tuesday, July 6, 2021.

Contractors work on a home under construction. (Photo: Micah Green/Bloomberg via Getty Images)

The U.S. economy grew at an annualized 6.5% rate last quarter, the government said Thursday — slower than the 8.4% economists expected.

Why it matters: It came as the economy made strides toward further reopening, vaccinations rolled out and government stimulus bolstered spending. But supply crunches held the pace of growth back.

Source: FRED; Chart: Axios Visuals

Worth noting: The economy is bigger now than it was before the pandemic, officially recovering from its pandemic-induced plunge. (But output is still less than where it could have been, had there been no pandemic.)

Details: A drop in inventory investment — what's available for businesses to sell — weighed on growth. So did a drop-off in housing, a sign that supply shortages crimped construction.

  • Consumer spending soared 11.8%, helped by the infusion of pandemic aid. That's one of the biggest surges on record, according to Bloomberg.
  • Economic growth picked up slightly from the 6.3% pace in the first quarter of 2021.
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