The U.S. Economy experienced record-setting growth in the third quarter, recovering around two-thirds of the “ground it lost earlier in the coronavirus pandemic,” WSJ reports.
U.S. gross domestic product improved by 7.4% in the recent quarter and at a 33.1% annual rate.
- GDP is the “value of all goods and services produced across the economy.”
That’s big…because in a year where a global pandemic disrupted business activity across the country, the economy is now only 3.5% smaller than the end of 2019.
- “The third-quarter increase followed a 9% quarter-to-quarter decline in the second quarter, or a 31.4% annualized drop.”
The annualized numbers are misleading, though. GDP is reported at an annual rate, based on a quarter’s growth pace continuing through a full year.
- The pandemic, however, has made those numbers swing wildly. “No one expects second- or third-quarter numbers to continue for a full year.”
Forecasters predict the economy will expand through the fourth quarter, but it will move slower this time.
- With tens of thousands of new Covid-19 infections reported each day, the pandemic is still very much “disrupting lives and commerce.”
- Analysts see this year ending smaller than 2019 but expect it to grow in 2021.
The Bottom Line: “The Wall Street Journal’s October survey of economists found that more than half of respondents don’t expect GDP will return to its pre-pandemic level until next year and that the economy will contract 3.6% this year, measured from the fourth quarter of 2019.”
The economy will keep recovering if we can continue to open up. Covid-19 cases are indeed spiking, which has concerned the markets, but deaths have not spiked. I am concerned about what will happen to the economy if we implement lockdowns again. Lockdown policy will most-likely be vastly different under Biden versus Trump.