The U.S. economy grew at an unprecedented pace in the third quarter as the government fueled consumer spending with more than $ 3 trillion worth of pandemic relief, but it will take a year or more for the deep scars from the COVID-19 recession to heal.
Gross domestic product (GDP) grew at an annual rate of 33.1 per cent in the previous quarter, the Commerce Ministry said in a forecast on Thursday. This is the fastest pace since the government began setting records in 1947, following a historic shrinking rate of 31.4 percent in the second quarter.
The GDP report – one of the last major economic scorecards ahead of next week’s presidential election – does little to alleviate the human tragedy caused by the coronavirus pandemic, leaving tens of millions of Americans still unemployed and more than 222,000 dead.
With five days to go before election day, President Donald Trump is lagging far behind in most national polls, perhaps with a spectacular rebound in GDP signaling recovery. But US output in the fourth quarter of 2019 was lower than its level, with the fact that Trump’s Democratic challenger Joe Biden is almost certain to highlight along with signs that the growth rate is rising rapidly.
According to a Reuters poll, economists expect the economy to grow at a rate of 31 percent in the July-September quarter. The economy fell into recession in February.
“We expect minimal growth [the fourth quarter] Consumer and business concerns will only increase in the face of growing virus infections, “said Sal Guterie, BMO’s senior economist.
In the absence of further U.S. government support this year, Goldman Sachs cut its growth forecast for the current fourth quarter from an annual rate of six percent to three percent.
Unemployment benefits are declining
The government rescue package provided a livelihood for many businesses and the unemployed, increasing consumer spending, which led to an increase in GDP. But government funding plummeted without any agreement for another round of relief. New COVID-19 cases are circulating across the country, imposing restrictions on businesses such as restaurants and bars.
More than half of the 22.2 million jobs lost during the epidemic have been regained and layoffs continue.
In the week ending Oct. 24, 751,000 people filed for state unemployment benefits, the Department of Labor said in a special report Thursday. In the previous period it was 791,000. Although records fell from 6.867 million in March, they are still above the 665,000 high seen during the 2007-09 recession.