The US economy bounced back with a record of growth in the third quarter, as business resumed and cash-driven consumer spending rebounded – far behind the collapse from the coronovirus lockdown.
Just as the second quarter decline in output was the largest in seven decades of data, so did the recovery in the third quarter: GDP grew by 7.4%, a quarterly profit equivalent to an annual pace of 33.1%, according to the Commerce Department. Preliminary estimates show on Thursday.
For a real-time response to Thursday’s data follow Bloomberg’s TOPLive blog here
Economists are projected to top the data by 32%, which was already well above the forecast. Three months ago for 18% profit. Growth in personal spending has increased, climbing an annual 40.7%, also a record, while business investment and housing also recorded strong growth.
While this report makes clear that the economy has found a solid place for now, analysts warn that growth will be much more modest and choppy in the coming months, especially as the virus outbreak speeds up again And MPs remain in an extended deadlock a new stimulus package
In addition, there are still around 11 million working on low wages before the epidemic, and Analysts say Full recovery in GDP occurs in at least several quarters.
Even with external gains, GDP is down 3.5% from its pre-pandemic peak, and the virus will keep trade and jobs depressed in areas such as travel and restaurants.
What do economists at Bloomberg say …
“Much of the third-quarter strength was concentrated at the beginning of the period; Since then there has been a significant slowdown. Bloomberg Economics expects a weak patch through the first quarter – driven by the impact of elevated Kovid-19 transmission on behavior, and financial support – and a return to pre-epidemic levels of GDP in the fourth quarter of 2021. ”
– Andrew Hasby, Economist
With only five days until Election Day, President Donald Trump will point to the latest figures as evidence of his ability to direct the US economy through the Kovid-19 crisis. His campaign issued a statement saying that the report “provides full verification of President Trump’s policies.”
It is not clear, however, how much impact the excited figures can have on the elections, especially given More than 77 million Americans have already cast their votes.
Futures on the S&P 500 rose slightly after economic data on Thursday morning. A separate report showed that US states fell more than last week’s forecast for unemployment benefits. The yield on the 10-year treasury was slightly changed and the dollar increased.
Most categories increased in the third quarter. Residential investment jumped 59.3%, the fastest since 1983, reflecting the recent boom in the housing market, supported by record-low mortgage rates.
Business investment rose 20.3%, although it was driven by the instrument, as both structures and intellectual property saw a decline.
Reconstruction of the inventions added 6.6 percentage points to the quarterly growth pace, and will continue to have an impact in the current quarter as companies are involved in stockpiles, which were sent down during the lockdown.
The impact of the epidemic on Americans’ spending patterns was also evident from the report. Consumer spending is usually about two-thirds of GDP.
Freight expenditure was above pre-epidemic levels, driven by an increase in motor vehicles and apparel. Services were received at a discount in health care and food services and housing, but overall were shy of levels seen at the end of last year.
Meanwhile, net exports fell 3.1 percentage points from growth as trade deficit widened. Government spending was 0.7 points due to nondenance and state and local benefits.
The third quarter figures are generally in line with solid corporate reports during the latest corporate earnings season. So far, about 85% of companies in the S&P 500 have beaten analyst earnings estimates, including General Electric Company and Microsoft Corp.
This is the first estimate of three for third-quarter data, and the figure is likely to be revised over the next two months as the Bureau of Economic Analysis receives more figures.
– assisted by Chris Middleton and Sophie Caronello
(Adds more background at the end of the story.)