The recent report released by the Commerce Department of the United States has given hope of revival for the country’s financial sphere as the corporate profits witnessed a sudden surge in the second quarter amid the expanding COVID-19 vertex. 

With this, the second quarter recorded a GDP surge at an annualized rate of 6.6% during the April-June period. The rise in corporate profits indicates that the speculations for the economy’s downfall in the third quarter caused by the sudden rise in Coronavirus cases are likely to be of short duration. 

What is seen as a surprise here is that the financial space managed to make profits even after facing the burden of increased costs due to a shortage of raw materials and labor. Talking about the third quarter statistics, economists have predicted a fall in economic growth because of the depleting demand for services related to tourism, air travel, cruises, along with other reasons. This was directly seen as an immediate effect of complications caused by the new Delta variant of coronavirus. The disease is fast spreading its tentacles across various countries, severely threatening the living population. 

The report revealed that profits from production reached $2.8 Trillion after enjoying a 9.2% quarterly rate surge. The profit income from domestic non-financial entities saw a rise of $169.8 billion in the second quarter. Profit was also recorded from domestic financial organizations. The pre-tax profits saw an increase of 0.7% and ended up at 12.3%. The price of the U.S Dollar increased against various currencies. The data given by the Labor Department showed that the claims for state unemployment programs rose to reach the 353,000 marks as per the last week of August. 

The national after-tax gains calculated without adjusting for stock and capital consumption increased by 303.6 billion, a 12.8% rise. The surge in demand can be attributed to the middle class and the low-income class. A significant impact of liberal monetary policy adopted by the Federal Reserve by offering low-interest rates and pumping prices of the stock market helped revive the economy. 

The chief economist of Bank of America Securities, Michelle Meyer, stated that the supply constraints and Delta variant had caused a speed bump in the economy. The authorities are hopeful of facing the complications with ease. The banking institute dropped its GDP growth from 7.0% to 4.5% in the third quarter. 

Indicators are signaling a rise in the fourth-quarter figures. With stock replenishment, business entities will enjoy a sharp growth rate of nearly 7% in 2021. The surge in demand is likely to push labor requirements while giving a push to the economic state of the United States. To encourage people to step out and work, nearly 25 states have walked out of central government-led unemployment programs. The financial condition will require constant and balanced labor, capital, and supply to return to its original form.

Antonio Moberg has recently joined our team as a chief news editor. He has years of experience as a news writer, financial news reporting and much more. He regularly curates content for upcoming news and happenings of business and finance world. He is also sound in technical analysis of stock market.

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