The US economy staged a record-setting rebound from a bad case of the coronavirus in the third quarter — but the nation has yet to shake all of its symptoms.America’s gross domestic product —
The US economy staged a record-setting rebound from a bad case of the coronavirus in the third quarter — but the nation has yet to shake all of its symptoms.
America’s gross domestic product — the value of all goods and services produced here — grew by roughly 7.4 percent from July to September as consumers and businesses emerged from the pandemic-related lockdowns that led to a 9 percent contraction in the second quarter, the feds said Thursday.
That growth equates to an annual rate of 33.1 percent, by far the largest since modern record-keeping began in 1947 and nearly twice the previous record surge of 16.7 percent in the first quarter of 1950, the US Commerce Department data show. Economists were expecting an annualized 31.9 percent jump after the second quarter’s 31.4 percent plunge.
But the recovery isn’t finished. The economy has only clawed back about two thirds of the activity lost in the first half of the year, leaving last quarter’s GDP of $18.5 trillion about 3.5 percent below the $19.2 trillion recorded in the fourth quarter of last year — before COVID-19 sparked the worst economic downturn since the Great Depression.
“We are still not out of the woods,” Yelena Shulyatyeva, senior US economist at Bloomberg Economics, told The Post. “We still need more growth to get back to the level that we saw pre-COVID.”
The feds nevertheless touted the figures as proof that the economy has come roaring back from the pandemic. President Trump tweeted that he was “so glad this great GDP number” came out before the Nov. 3 election, underscoring the political significance of the quarterly data.
“Biggest and Best in the History of our Country, and not even close,” Trump said on Twitter. “Next year will be FANTASTIC!!!”
But the path to a full rebound is rocky. Another nationwide surge in coronavirus infections and hospitalizations has raised fears that the lockdowns could return in parts of the US as they have in France and Germany. More than 12 million workers remain unemployed, and layoffs have mounted in recent months as large corporations grapple with the lasting impact of the virus.
Moreover, the stimulus measures that put money in Americans’ pockets and helped shore up consumer spending — the driving force behind the nation’s economy — have run dry, with no agreement in sight for a new spending package from Washington.
“Even if we get a support package soon, when is that going to put cash in consumers’ hands?” Dan North, senior economist at Euler Hermes North America, told The Post. “I think it imperils holiday sales and [the fourth quarter] altogether.”
Consumer spending accounted for $12.9 trillion — or some 69 percent — of total GDP in the third quarter, rising 8.9 percent from the prior quarter as stores reopened and workers returned to their jobs.
But there was a shift from spending on services like restaurants, hotels and health care to spending on goods such as cars and furniture as Americans sought to avoid public transportation and spruce up their homes.
The roughly $5.1 trillion shelled out for goods accounted for 39.7 percent of the quarter’s total consumer spending, up from about 36 percent in the same period last year, while services made up some $7.9 trillion, or 61.3 percent, compared with roughly 64 percent a year ago.
But last quarter’s growth only brought consumer spending back to roughly where it was in mid-2018, federal data show. And it’s unclear how much the momentum will continue with the virus spreading fast and no government relief on the way.
The virus is “the single biggest risk out there, there’s no question about it,” North said.