Commentary The U.S. economy recovered at a 6.5 percent annualized rate in the second quarter of 2021, and gross domestic product (GDP) is now above the pre-pandemic level. This should be viewed as good news, until we put it in the context of the largest fiscal and monetary stimulus in recent history. With the Federal Reserve purchasing $40 billion of mortgage-backed securities (MBS) and $80 billion in Treasuries every month, and the deficit expected to run above $2 trillion, one thing is clear: The diminishing effect of the stimulus isn’t just staggering, the increasingly short impact of these programs is also alarming. The GDP figure is even worse considering the expectations. Wall Street expected a GDP growth of 8.5 percent, and most analysts had trimmed their expectations in the past months. The vast majority of analysts were sure that real GDP would comfortably beat consensus estimates. It came in massively …
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