US GDP grows at a 33.1 percent annual rate in the third quarter, the fastest pace on record.
The United States economy grew at its fastest pace on record in the third quarter, rebounding at an annual rate of 33.1 percent, the Bureau of Economic Analysis said on Thursday.
The blockbuster reading follows on from a record-shattering 31.4 percent contraction in the second quarter- and a negative 5 percent hit in the first quarter – when the economy officially entered recession in February.
The balance signals that though the economy is crawling out of the deep hole dug by COVID-19 it still has a way to go to recapture its pre-pandemic strength.
Put simply, the economic crisis is not over.
Moreover, some sectors of the economy are recovering faster than others and those disparities are rippling through the fabric of American society in the form of deepening inequalities.
Those with a job and assets like stock portfolios and homes are doing well, while those who are jobless or own a business ravaged by virus restrictions are falling further behind. Racial wealth and income disparities are widening. Women are dropping out of the workforce at an alarming rate as the demands of work and looking after children learning remotely force tough choices.
Thursday’s report on gross domestic product (GDP) is the last major economic data release before the November 3 US presidential election.
Though the headline number may be seized upon as a bragging point for President Donald Trump, it is unlikely to dramatically influence his reelection prospects, given more than 75 million Americans have already voted, according to the US Elections Project.
But there is a world of uncertainty that lies ahead – both for the election and the economy.
If the results of the election are contested, it could lead to further hold-ups with a new round of virus relief aid as the White House and Democrats in Congress fail to find common ground.
The stakes could not be higher. Aid from the federal government such as enhanced employment benefits, lifelines for small businesses, and one-off cash payments to households helped the economy bounce back in the third quarter. But those stimulus effects are fading.
There is a mounting body of data that points to a downshifting recovery in the fourth quarter. Federal Reserve Chairman Jerome Powell has warned that more government spending is needed to keep the recovery on track.
Now surging COVID-19 infections are raising the spectre of more business-sapping restrictions.