The U.S. economy grew at a record-breaking 33.1% annual rate in the third quarter, the Commerce Department reported Thursday, beating forecasters’ expectations.
The massive growth number, although not enough to return the economy to pre-pandemic health, will provide President Trump to claim in the last days of the election that the country is clawing its way out of the COVID-19 recession faster than critics thought possible.
“This record economic growth is absolute validation of President Trump’s policies which create jobs and opportunities for Americans in every corner of the country,” said Tim Murtaugh, the Trump campaign’s communications director.
Still, the economy is 3.5% smaller than it was at the end of 2019.
“We have a long way to grow out of the deep hole dug by the second quarter crash,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Returning the economy to full health would have required third-quarter growth of 63.7% at an annual rate.
The third-quarter growth, which was 7.4% on a month-to-month basis, represented businesses returning to work after being shut down in the spring during the worst of the pandemic.
In other words, it was a partial bounce back from the record-breaking economic contraction of 31.4%, annualized, in the second quarter.
Still, less catch-up growth is expected for the next quarter.
Consumer confidence decreased in October, the Conference Board announced on Oct. 27, as households saw the jobs recovery from the pandemic slowing.
“There is little to suggest that consumers foresee the economy gaining momentum in the final months of 2020, especially with COVID-19 cases on the rise and unemployment still high,” said Lynn Franco, senior director of economic indicators at the Conference Board.
The index now stands at 100.9, down from September’s 101.8. The consumer confidence numbers are indexed to 1985, and a number at 100 or above signals that confidence is strong. The report shows that confidence is still in the positive territory but weakening.
“Expectations declined, driven primarily by a softening in the short-term outlook for jobs,” Franco said.
Fewer firms are also looking to add new workers in the fourth quarter, according to polling released Oct. 26 by the National Association for Business Economics, making it harder for the economy to regain the millions of jobs lost in the pandemic.
Stephen Moore, an outside Trump adviser and contributor to the Washington Examiner, said that GDP at the end of this year will be 3% off from pre-pandemic levels.
“Most people are predicting 4-5% growth in the fourth quarter. That means we will be in a mild, mild recession, not the economic catastrophe everyone predicted we would be in,” he said.
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