U.S. Economy Roars Back in Third Quarter – GDP Growth Up 33%+
The highly anticipated numbers from the third quarter economic report are in – and they show the V-shaped recovery continuing without interruption. And the news comes with just days until the election.
Lockdowns and the coronavirus fueled a 31.4% contraction in Q2 on an annualized basis (the worst in U.S. history), and 22 million jobs were lost by the time the economy bottomed out. The number of employed hit a record 152.5 million in February before the plague plunged that to 130.3 million. The economy has since recovered roughly half of those jobs, with 141.7 million currently employed.
According to Fox Business:
Gross domestic product, the broadest measure of goods and services produced across the economy, surged by 33.1% on an annualized basis in the three-month period from July through September, the Commerce Department said in its first reading of the data Thursday.
Personal consumption increased 40.7%, while private domestic investment surged 83%. Residential investment grew 59.3%.
The previous post-World War II GDP growth record was a 16.7% increase in 1950 [roughly half the 2020 Q3 figures].
Refinitiv economists expected the report to show the economy had expanded by 31%.
Because these statistics are annualized, it means that the economy would’ve grown 33.1% for the entire year if every quarter grew at the same pace as this one. This is also the same for the Q2 contraction statistic, and the consumption and investment stats.
Based on quarterly data the economy contracted 9% between the first and second quarter of the year, and grew 7.4% from the second to third.
The U.S. economy declined less than analysts expected it would due to the coronavirus, and has recovered faster than the experts predicted. As of September the U.S. unemployment rate was lower than analysts from America’s top financial institutions expected it would be by September of next year.
Of course, we’re not out of the woods yet. The overall size of the economy is still 3.5% smaller than it was at the end of 2019, and roughly another 11 million jobs need to be added to equal the prior peak. Don’t expect that to happen anytime soon with a Joe Biden presidency.