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Home / Business / GDP grew rapidly at a record rate of 33.1% in the third quarter, but the recovery from the coronavirus threatens the US economic recovery

GDP grew rapidly at a record rate of 33.1% in the third quarter, but the recovery from the coronavirus threatens the US economic recovery



digital: After the struggling US economy began to recover from the coronavirus epidemic in the third quarter, it grew at a record annual growth rate of 33.1%, but the historical rebound in the summer has gradually weakened, and a new virus outbreak may further inhibit growth.

The widely anticipated GDP rebound, the official scorecard of the US economy, has received trillions of dollars in government assistance to families, the unemployed, and businesses most affected by the virus.

However, most aid has now expired, and another surge in coronavirus cases across the country seems to have caused Americans to succumb again. If states re-impose commercial restrictions, but customers avoid retailers, restaurants, and other businesses that rely on large numbers of people to thrive, the economy may suffer another severe blow.

President Trump has been touting the recovery of GDP during the campaign in an effort to increase votes, but Democrats argue that the economy is still in a downturn and a new approach is needed.

The GDP growth in the third quarter was in line with the 33% forecast of economists surveyed by MarketWatch. In pre-market trading, the US stock market opened slightly down.

read:Why record economic growth is not as good as it seems

what happened: GDP performs various checks on an economy that measures all aspects that promote growth. Data in the third quarter showed that consumer spending hit a record high and business investment recovered, which are two important pillars of the economy.

The government reported on Thursday that consumer spending has soared at a rate of 40.7% per year, almost twice the record set shortly after World War II. This increase largely but not completely offset the record decline in the second quarter.

At the same time, investment in equipment business surged by 70.1% in the third quarter. As record low interest rates have spawned amazing growth in home sales and construction, investment in new homes has also jumped by nearly 60%.

In the third quarter, the value of inventories surged by US$286 billion because the company kept inventories extremely low at the beginning of the crisis, thereby increasing production and thus production.

The rebound in business investment is a good barometer because it shows that companies are more optimistic about the future (if not current) of economic growth.

read:Aircraft orders plummeted and hit a record low, COVID pandemic and quarantine led to travel

Negative business impact: Spending on construction such as oil rigs and office buildings fell for the second consecutive quarter. The pandemic has reduced the need for energy and raised questions about the future of office work from home.

After spending surges in the second quarter, the federal government also cut spending in the summer. Federal spending fell by 6.2%, deducted from GDP. Local and state expenditures have also fallen.

The larger international trade deficit is another obstacle. Because Americans spend part of the government’s stimulus plan on foreign goods, American imports have surged at a rate of 91% each year. Although exports have not yet recovered to their pre-crisis levels, the growth rate of exports is small, but still as high as 60%.

The inflation rate, measured by the Fed’s preferred PCE price index, accelerated at an annual rate of 3.7% in the third quarter, but the inflation rate in the United States was generally low.

see:MarketWatch Coronavirus Recovery Tracker

Big picture: Judging from the rearview mirror, the US economy experienced an astonishing rebound in the third quarter and repaired most of the losses caused by the blockade at the beginning of the pandemic, but not all the losses.

Compared with the end of 2019, the current economic scale is still significantly smaller, and the viral recession has left many scars, which may be permanent.

For example, at least 11 million people were unemployed before the pandemic. Many industries, such as tourism, have almost never stopped. The new peak of coronavirus cases threatens to undo some progress.

Economists surveyed by MarketWatch had predicted that GDP growth in the fourth quarter would be much smaller at 3.2% before the latest outbreak. If the situation gets worse, they can even further reduce the forecast.

What are they talking about? Paul Ashworth, chief economist at Capital Economics, said: “After the first wave of blockades were lifted, the initial GDP recovery was stronger than we initially expected.”But as coronavirus infections have reached record high levels in recent days, and it is impossible to take any additional fiscal stimulus measures until early next year at the earliest, further progress will be much slower. “

Market Reaction: Dow Jones Industrial Average Dow Jones Industrial Average,
+ 0.06%
And S&P 500 SPX,
+ 0.55%
Will open lower for trading on Thursday. After some European countries announced new restrictions, stock prices fell on Wednesday. The global coronavirus cases have surged.


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