US still depends on stimulus for recovery

The gross domestic product of the United States grew at a seasonally adjusted annualized rate of 6.5 percent from April to June, the US Commerce Department said, higher than the 6.3 percent growth in the first quarter.

The annualized growth rate indicates how much the US economy would have grown if the second quarter's pace had lasted for 12 months.

The robust growth of the second quarter stems from the strong stimulus policies and the low base of the same period last year, when the US economy contracted 9.1 percent due to the outbreak of the novel coronavirus.

As of June, the US government had rolled out two large-scale stimulus policy packages with an overall expenditure of more than $5 trillion to bail out the economy. And as of the end of March, the supply of broad money in the country increased 24.4 percent from that of the same time last year.

And in the first half of this year, the US economy grew 6.1 percent year-on-year, and its output level had recovered to the pre-epidemic level in February 2020.

Compared with the fourth quarter of 2019, the US economy grew only 0.8 percent in the second quarter. In contrast, China's economy in the second quarter grew more than 8 percent from the level of the fourth quarter of 2019.

Unlike China where the recovery of demand is slower than the recovery of production, the scenario is the other way round in the US where the government's stimulus packages and limitless quantitative easing policies have effectively resuscitated consumer demand.

So the US has to rely more on imports to meet domestic demand, which is evidenced in its rising foreign trade deficit in the second quarter, up 62.5 percent compared with that of the second quarter last year. The increase in imports will continue.

Generally speaking, the recovery of the US economy is faster than that of the major European countries and Japan－the GDP of the European Union has surged 2 percent in the second quarter compared with the previous quarter－where the resurgence of the pandemic has hit their exports to the US, and where domestic demand is weaker than that of the US.

The resurgence of the pandemic boosted by the transmission of the Delta variant of the virus will create more uncertainties to the recovery of the major economies in the second half of this year.