The U.S. economy soars at a record-shattering pace in the third quarter, repairing much of the nation damage that was caused by an unprecedented pandemic early in the year.
The Commerce Department Thursday morning released the first reading of the nation’s Gross Domestic Product (GDP), surging at a 33.1% on an annualized pace produced during a three month period of July through September. Last quarter, the economy had contracted at an annual revised rate of 31.4%, the sharpest decline in modern American history.
The growth of the third quarter was spiked by the revival in consumer spending when the majority of states eased shutdown restrictions over the summer and employers rehired workers. Consumer activity accounts for 68% of the GDP economic activity, with the third-period, saw personal consumption jumped by 40.7%, the largest increase on record, after tumbling 33.2% in the second quarter. Spending on equipment such as computers and factory equipment leaped to an eye-popping 70.1% in the third quarter.
Business and housing investment showed strong gains that helped fuel the rebound. Business investment jumped 20.3%, the largest quarterly increase since 1983, after a 27.2% drop in the first quarter. Housing construction and renovation rose 59.3% after a 64.4% plunge in the second quarter.
The nation’s GDP grew 7.4% from the second quarter to the third, based on the quarterly data. Between the first and second quarter, the GDP declined by 9%. Compared to the 2019 GDP record, the economic growth remains 3.5% beneath its level peak.
Economists expected the report data to show the economy expanded by 31%.
Another economic figure also released from the Labor Department showed the weekly unemployment claims reported the week ending Oct. 24 showing that 751,000 Americans filing for claims, falling under 800,000 for the first time since the shutdown of the nation’s economy in March.
Both economic indicators came out ahead of Tuesday’s Election Day and amid this week’s big market sell-off. President Trump had made restoring a once-vibrant economy he created that was battered due to the coronavirus downturn a key centerpiece of his presidential campaign.
“GDP number just announced,” Trump tweeted. “Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!! However, Sleepy Joe Biden and his proposed record-setting tax increase would kill it all. So glad this great GDP number came out before November 3rd.”
GDP number just announced. Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!! However, Sleepy Joe Biden and his proposed record setting tax increase, would kill it all. So glad this great GDP number came out before November 3rd.— Donald J. Trump (@realDonaldTrump) October 29, 2020
The Trump Administration and his re-election campaign took a victory lap after GDP figures were released, touting President Trump policies that culminated the rebound.
“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,” Trump 2020 campaign communications director Tim Murtaugh said in a statement. “The President built the world’s best economy once and he’s rapidly doing it again, proving that cutting taxes and reducing regulations and red tape clear the way for American ingenuity and our entrepreneurial spirit to thrive. We have regained more than half of the jobs lost to the global pandemic in less than six months, while it took more than two years to regain half of the job losses from a recession while Joe Biden was in charge.”
Larry Ludlow, National Economic Council director in a conference call with reporters Thursday afternoon said the economy is “really hitting on all cylinders” and believes the fourth quarter will be “very strong.”
Democratic presidential nominee Joe Biden dismissed the latest GDP growth, stating it’s not “nearly enough” to get the country out of a “deep hole.”
“This report underscores three inescapable truths about Donald Trump’s economy: we are in a deep hole and President Trump’s failure to act has meant that Q3 growth wasn’t nearly enough to get us out of; the recovery is slowing if not stalling, and the recovery that is happening is helping those at the top, but leaving tens of millions of working families and small businesses behind,” Biden said in a statement.
“Even with today’s report, GDP still remains $6,000 per household below its pre-crisis level, payrolls are down by nearly 11 million workers, and 23 million people are claiming unemployment ‒ including 750,000 new claims last week,” Biden continued. “Today’s report is not a victory for these families.”
Despite Biden noting that the economy has improved, playing politics he slammed the economic relief by mentioning Americans who continue to visit food banks that “haven’t slowed and poverty has grown.”
“I have called this a K-shaped recovery — because much of the growth we’ve seen has accumulated to those already well-off and has failed to reach those who need it the most,” Biden said. “Yes, GDP rose last quarter, but visits to food banks haven’t slowed, and poverty has grown. African Americans and Latinos still face double-digit unemployment rates. The added caregiving burden in the wake of Trump’s failed pandemic response has forced many women to drop out of the labor force altogether.”
Economists worry the growth will decrease in the fourth quarter amid a fresh viral outbreak of coronavirus cases along with a lack of a new round of stimulus relief. Congress for months have struggled to reach an agreement with the White House on funding for a third round of emergency relief with many provisions provided to provide relief to businesses and workers amidst the pandemic are set to expire at the end of the year.