GDP Jumps to Record-Setting 7.4% in Third Quarter
The economy set a record-breaking rebound in the third quarter — but there’s still a long way to go before a full recovery is made.
America’s GDP (gross domestic product) — the value of all goods and services produced — grew by approximately 7.4% from July to September. This indicates that consumers and businesses had a strong “bounce back” from the COVID-19-related lockdowns that led a second-quarter meltdown.
That growth is equal to an annual rate of 33.1% and is one of the largest since modern record-keeping started in 1947 and nearly double the previous record of 16.7% in the first quarter of 1950, according to US Commerce Department. Expectations from economists were 31.9% after the second quarter’s 31.4% drop.
Ways to Go
Keep in mind the recovery effort is from complete — last quarter’s GDP of $21.1 trillion was still about 2.7% below the $21.7 trillion recorded in the fourth quarter of 2019 before the pandemic ushered in the worst economic downturn since the Great Depression.
“A record surge in third-quarter GDP will likely mark the beginning of the recovery, after a recession which abruptly started in the fourth quarter of last year and likely ended in the second quarter,” said Yelena Shulyatyeva, senior US economist at Bloomberg Economics. “Yet the scale and unprecedented nature of the COVID-19 downturn will leave lingering scars during the recovery.”
Getting back to normal from an economic standpoint however remains a bit murky — the rise in new coronavirus infections and hospitalizations has raised concerns for future lockdowns in parts of the US, as recently seen in parts of Europe.
The stimulus package from this past spring, helped many businesses and everyday Americans stay afloat – keeping consumer spending up. That said, with no agreement for a new stimulus package, additional help may not becoming.
The Federal Reserve, which has been aggressive in getting Congress to get another stimulus bill passed expects GDP to shrink by 3.7% this year following growth of 2.3 percent in 2019. Washington remains skeptical about a bill passing but it’s not likely to be passed until after the upcoming Presidential election.