US GDP surged a record 33% in the 3rd quarter as the economy reopened, roughly double the next-biggest jump
gross domestic productgrew at a record 33.1% annualized rate in the second quarter, the Commerce Department said on Thursday.
- The jump followed the second quarter's 31.4% annualized slump and roughly doubled the next-biggest increase on record. Economists surveyed by Bloomberg had expected a 32% increase.
GDPreading caps a quarter of economic reopenings and revived business activity throughout the country.
- Still, the 33% increase doesn't offset the prior quarter's decline. Experts have said a full recovery may take years, as the pace of
GDP growthis set to moderate significantly in the last three months of 2020.
After the coronavirus pandemic's toll drove a record plunge in economic output in the second quarter, the US's summer recovery fueled the largest-ever jump in gross domestic product.
US gross domestic product grew at an annualized rate of 33.1% in the third quarter, the Commerce Department said on Thursday. The reading is the largest output gain on record, in data going back to the 1940s. It's roughly double the next-biggest jump, in 1950. Economists surveyed by Bloomberg had expected a 32% gain.The reading represents how much the
Read more: The founder of a volatility-hedging program that gained 3,700% in the March crash says 'the opportunity is ripe' for another chaotic market event — and shares how investors can take advantage of itThe historic rebound was led by the gradual reopening of businesses and revitalized spending activity. As quarantine orders eased, Americans used cash from the $2.2 trillion CARES Act to revive the economy from its frozen state.
But the V-shaped trendline in GDP growth glosses over the recovery's nuances. More frequently updated indicators such as nonfarm payrolls, credit-card spending, and purchasing managers' indexes signaled a slowed pace of recovery through the end of the summer.Roughly half of the Americans who lost their jobs in the pandemic remain unemployed. Consumer spending enjoyed a sharp bounce-back before easing to a more moderate growth rate. "Not only was the US economy enjoying the immediate bounce as a result of economic re-openings, but it was basking in significant fiscal stimulus support schemes," said Seema Shah, the chief strategist at Principal Global Investors. "Now, the path forward will inevitably be an uphill struggle."
And while the 33% GDP increase might seem to offset the second-quarter slump, it doesn't place overall output back at its pre-pandemic highs. Third-quarter growth would have needed to reach roughly 46% to balance out the record downturn.
Economists have said a full recovery may take years, as fourth-quarter growth is expected to land well below Thursday's blockbuster reading."If the provisional figure is correct, the US economy has now recovered to around 10% below its level in the first quarter, before the onset of the pandemic in the US," said Cailin Birch, the global economist at the Economist Intelligence Unit.
The recovery also faces risks from increasing COVID-19 case counts. Some countries in Europe have reinstated lockdown measures as coronavirus infection rates and death tolls rise, and some fear that the US could take similar steps.Should the economy continue to bounce back amid the virus resurgence, it will have to do so without fresh fiscal stimulus. The CARES Act has been widely praised as a primary driver of the third quarter's sharp improvement, but aid allocated in the bill has largely expired.
Wall Street economists see a second term for President Donald Trump likely furthering the recent legislative stalemate. A Democratic sweep, however, could yield a sizable stimulus measure in early 2021.Read more: Market wizard Tom Baldwin started trading with $25,000 and grew it to an estimated $30 million. He shares 6 timeless trading rules that helped him reach millionaire status before his first year was through.
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