The US economy grew 1.6% last quarter, or 6.5% at an annual rate, which officially brings real GDP back to its pre-pandemic level.
The economy is back
It's hard to overstate how violent and sharp the downturn in economic activity was last year. Never before had we seen anything even remotely close to the -31% annualized real GDP growth that we saw for one quarter in 2020. The worst quarter during the global financial crisis of 2008 saw the economy contract at a rate of -8.5%, and some thought we were close to the collapse of our entire financial system at the time.
So GDP has bounced back strongly. That is great, of course, but GDP is just an aggregate measure. Millions remain unemployed, or in jobs that they'd rather not have — and then there's the issue of inflation, which continues to worry many observers, and is having a real impact on workers. Average hourly wages reportedly rose 3.6% in June, but once you factor in inflation (which is running at 5%+), many workers have actually had a pay cut in real terms.
