US Economy Grows at Record Pace, With an Asterisk

US Economy Grows at Record Pace, With an Asterisk

Economists and Federal Reserve officials have repeatedly argued that more fiscal relief is needed to sustain the USA economic recovery, but Congress and the White House remain deadlocked over the next round of COVID-19 relief bill. U.S. Treasury prices fell.

Meanwhile, the weekly tally of new applications for jobless benefits are only slowly coming down, dropping 40,000 to 751,000 in the week ended October 24, according to Labor Department figures released Thursday.

Americans saved more than $22 trillion between March and September.

The jump marks the largest quarterly gain on record.

Back in February, the BLS unemployed figure was 5.8 million.

With five days remaining to Election Day, President Donald Trump, trailing in most national opinion polls, will probably seize on the stunning rebound in GDP as a sign of recovery. And President Trump's campaign immediately hailed the news as "absolute validation" of Trump's policies and management of the economy. Here is how one analyst sums things up for the Wall Street Journal: "This is the quarter that captures the reopening of the economy", says Tim Quinlan of Wells Fargo Securities.

Democratic presidential nominee Joe Biden dismissed the USA economy's record-shattering growth as not "nearly enough" to get the country out of a "deep hole" on Thursday.

For voters, the choice is simple: "It's a Trump boom versus a Biden depression". "We anticipate a much slower second phase of the recovery, with output not reclaiming its pre-COVID level until late 2021".

Economists polled by Reuters had forecast the economy expanding at a 31% rate in the July-September quarter. "Spending on services - particularly on anything tourism/entertainment - is likely to remain soft as long as the virus threat remains".

The big third quarter brings the economy to a $20.75 billion per quarter GDP average for 2020, still 3.2 percent off the $21.43 billion per quarter GDP average seen in 2020.

However the restoration isn't full - final quarter's GDP of $21.1 trillion was nonetheless about 2.7 % beneath the $21.7 trillion recorded within the fourth quarter of final yr, earlier than COVID-19 sparked the worst financial downturn because the Nice Despair.

The Federal Reserve, which has pushed Congress to move one other stimulus invoice, expects GDP to shrink by three.7 % this yr following progress of two.three % in 2019.

The S&P 500 edged higher by 0.2 per cent, as the economic data allayed some worries but advances were capped as the number of coronavirus cases continues to rise.

Spending by businesses in the third quarter surged as well.

"We are in a deep hole and President Trump's failure to act has meant that third-quarter growth wasn't almost enough to get us out of (it)", said Biden.

With no further USA government aid in sight this year, Goldman Sachs has slashed its growth forecast for the current fourth quarter to a three per cent annual rate from six per cent.

The formula gives the greatest weight to the first month of the quarter, slightly less weight to both the second month of the quarter and the third month of the previous quarter, and slightly less weight again to the third month of the quarter being measured and the second month of the previous quarter.

Related Articles