US economy expands fast, just not as fast as expected

<p>Kia ora,</p><p>Welcome to Friday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news the world's largest economy is now bigger than its pre-pandemic level but the push up isn't what they had hoped.</p><p>The US reported its <a href="https://www.bea.gov/news/2021/gross-domestic-product-second-quarter-2021-advance-estimate-and-annual-update" target="_blank"><strong>Q2 economic growth</strong></a> as +6.5% pa which was slightly higher than the +6.3% Q1 expansion. But this was a major miss when +8.5% growth was expected even though the US economy is now larger than its pre-pandemic level. While household consumption roared back, this was undermined by smaller new house building activity, smaller federal government spending that a year ago, and the surge in imports, all factors we have covered in these daily reports. The size of their impact has caught most analysts by surprise. But being underpinned by strong core household activity lessens the concerns about this miss. This is 'advance' data, so tow more updates are due and may push the final result back up toward the expected result.</p><p>US <a href="https://www.bea.gov/news/2021/gross-domestic-product-second-quarter-2021-advance-estimate-and-annual-update" target="_blank"><strong>PCE</strong></a> (personal consumption expenditure) prices rose more than expected, up +6.4% and well above expectations. This is the inflation measure the US Fed looks to more than the CPI.</p><p><a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20211419.pdf" target="_blank"><strong>Initial jobless claims</strong></a> came in high again last week, extending the higher levels we reported for the prior week. The actual level was +345,000 taking the total number of people on this support to 3.2 million.</p><p>US <a href="https://www.nar.realtor/newsroom/pending-home-sales-fall-1-9-in-june" target="_blank"><strong>pe