However, the third quarter was one of the records. Gross domestic product – the broadest indicator of economic activity – grew by 33.1% a year and seasonally adjusted between July and September. The pace of expansion has been faster than economists expected.
The government reports GDP on an annual basis, assuming quarterly growth rates continue throughout the year. This practice makes it easier to compare data over time.
But given the unprecedented economic problems caused by the pandemic, some economists believe that real GDP growth is the best measure to tell the story of the US economy.
Quarterly GDP increased by 7.4% from the second to the third quarter, compared to a decrease of 9% between the first and the second quarter.
This rapid growth is the result of an economic reorientation after the spring investment, but America has not yet lost control.
Both sides of the political chessboard will see this as proof of the strength of the economic recovery after the seizure or as an early warning that the gains could be short-lived, said James McCann, chief economist at Aberdeen Standard Investments, in an e-mail commenting on the event.
The truth for both sides: The economy has partly recovered thanks to the easing of the blockade restrictions. But the big push is over and Covid-19 infections are on the rise again. Moreover, Congress is still in deadlock because of another stimulus package.
Although annual growth in the third quarter was higher than in the second, this does not mean that the economy has fully recovered.
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The decline from April to June was so severe that, despite significant growth in the third quarter, it started from a much lower base. If we compare the size of the economy in the third quarter with that of the fourth quarter of last year, before the pandemic, the hammers of this house still total $670 billion, or 3.5% less than at the end of 2019.
Not yet normal.
The National Bureau of Economic Research reported that the recession pandemic started in February. It defines the recession as the time between the peak of economic activity and its low point. It is not yet officially clear whether the recession is over. If that were the case, it would be much shorter than the average recession.
However, economists fear that the economy will slow down again in the last three months of the year. In the meantime, the infection with Covid 19 is rapidly increasing again and raises the suspicion that new blockade restrictions could exacerbate the pandemic recession. In Europe, the increase in diseases has already led to stricter rules.
The Return to Normal Index, compiled by Moody’s Analytics and CNN Business, shows that economic activity has remained virtually unchanged in just a few weeks.
Millions of people are still unemployed and depend on government benefits to make ends meet. In September, the US labour market fell by a further 10.7 million jobs compared to the pre-crisis period.
Individual sales declined $541 billion in the third quarter after an increase of $1.45 trillion in the second quarter as the impact of pandemic programs, including the stimulus, faded.
Additional unemployment benefits of $600. The $500 million a week expired at the end of July and was only partially completed by an executive order signed by President Donald Trump.
If the effect of these economic stimulus packages diminishes, this could slow down the recovery. The US economy is indeed heavily dependent on consumer spending.
Between July and September, a sharp increase in consumer spending, particularly in health care, food and housing, and cars, led to a recovery of the economy. In general, however, the cost of services remains well below the maximum level applicable prior to the period.
On the other hand, federal, state and local government expenditures have decreased and the country has imported more foreign goods, which are deducted from GDP.
Economists expect much more modest growth – well below 10% year-on-year – in the last quarter of the year. It will take until the end of 2021 for economic output to return to pre-virus levels, said Gregory Daco, chief economist at Oxford Economics.
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