GDP grows at a 6.5% annual rate in the second quarter. That’s good, but…

If all of the unemployed workers who were called back to work actually went back to work, the growth number could have exceeded 8%.

According to the Bureau of Economic Analysis (BEA) first estimate of GDP growth, the economy grew 1.6% in the second quarter of this year. That means growth was 6.5% on an annual basis. This is slightly higher than the 6.3% growth in the first quarter.

While 6.5% annual growth is very strong, the number was below economists’ expectations. The consensus view was that the economy would be growing at an 8.5% annual rate. Why were the economists’ forecasts so far off the actual number?

Since May of last year, the economy has recovered very rapidly. We experienced a V-shaped recovery from the steep, but very short lived, recession. The recession actually lasted about six weeks, from mid-March to the end of April. Because of the economic shutdown, GDP growth turned negative. On an annual basis, second quarter GDP economic growth was almost -32%.

But the economy began to re-open in May. More than 4.4 million jobs were added back to the economy in May and June of last year. The third quarter GDP growth hit a whopping 33.1%.