The Day at a Glance | July 29 2021

The Top

*The US economy grew less than expected in the 2Q21 (6.5% annualized vs 8.5%e.).

*The FED recognizes that the economy has achieved progress regarding its inflation and full employment targets, even though it`s still not the right time to withdraw stimuli.

*Infrastructure investment package in the United States will be partially financed with cryptocurrency transaction taxes.

*Unemployment in Germany decreased more than expected and set at 5.7% during July.

Economic environment

The United States grew less than estimated in the 2Q21. US GDP recorded a 6.5% annualized rate of growth during the second quarter of 2021, figure considerably lower than the expected 8.5%. The disappointment is explained by a larger than expected shrinkage in inventories, which decreased up to 1.13% of growth in the economy. The greater part of growth came from consumption, which increased 11.8% annualized during the quarter amidst an important recovery in the consumption of services (12%) due to the economic reopening, vaccine programs, and the government`s fiscal stimuli. A record level of growth was logged in consumption, which was overshadowed by disruptions in productive chains that affected inventory replacement. Fixed investment increased 3%, while government spending decreased (-) 1.5% and net exports decreased up to 0.44% of growth given a larger than expected increase in imports (7.8%) over exports (6%). The data confirms that the economy barely accelerated with respect to the 1Q21 (6.3%) and greater acceleration is not expected in the following quarters; even though the 3Q21 could log an additional boost if inventories recover.