Northwest Arkansas Democrat-Gazette
3Q growth estimate raised a bit
Rebounding economy expanded at 33.4% pace, agency says
WASHINGTON — The U.S. economy expanded at a record 33.4% annual pace from July through September, the Commerce Department said Tuesday, delivering the last of three estimates on the economy’s third-quarter performance. But it’s likely that a resurgence in coronavirus cases has slowed growth sharply during the last three months of 2020.
The July- September growth spurt — upgraded slightly from the department’s previous estimate of 33.1%, announced last month — marked a sharp recovery from the second quarter’s 31.4% drop, the worst in records dating back to 1947. The American economy went into freefall when the pandemic hit in mid-March.
In the third quarter, consumer spending surged at an annual rate of 41% and private investment shot up by 86.3%.
The quarter’s economic rebound was led by manufacturing, health care and restaurants, indicating such industries benefited most from reopenings after the initial pandemic lockdowns.
More recent data shows the economy slowing again as another wave of virus cases and renewed shutdowns weigh on the nascent recovery. Initial jobless claims rose to a three-month high in the most recent week of data, while retail sales in the crucial pre-holiday month of November fell more than forecast.
Employers slashed 22 million jobs in March and April, then began to steadily recall furloughed workers. But the United States is still 9.8 million short of the jobs it had in February, and hiring has
slowed every month since June.
The surge in new covid-19 cases — now averaging about 220,000 a day, up from fewer than 35,000 in early September — is causing governments to issue lockdown orders and is keeping Americans at home to avoid infection.
Growth in gross domestic product — the broadest measure of economic output — is expected to slow to just 2.8% in the fourth quarter, according to the Conference Board, a business research group.
Congress on Monday approved a $900 billion economic relief package that includes a $600 direct stimulus payment to most Americans, an extra $300 a week in unemployment benefits and new subsidies for hard-hit businesses and renters facing eviction.
The latest federal fiscal stimulus omits direct state and local aid, and it extends federal unemployment benefits only to midMarch, even though millions of people probably will be out of work for far longer.
“This is better than nothing, and there’s some good news that we’re finally getting a deal,” said Kathy Bostjancic, chief U.S. financial market economist at Oxford Economics. “The bad news is it’s less stimulative than the prior packages, and the relief measures are short-lived.”
The agreement provides relief for small businesses, the unemployed, public transportation and schools, and it helps fund vaccine-distribution efforts.