U.S. Economy Grows At Record Pace But Still Has A Long Way To Go

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Signs in the window of a retail store offers discounts, and jobs, in Santa Monica, Calif. U.S. GDP grew at a record-setting rate, reflecting pent-up activity after the coronavirus lockdowns, but economists warn of trouble ahead.

Reed Saxon/ASSOCIATED PRESS

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Reed Saxon/ASSOCIATED PRESS

Business
3 Months Of Hell: U.S. Economy Drops 32.9% In Worst GDP Report Ever

Analysts note the economy is still about 3.5% smaller than it was at the end of last year, before the once-in-a-lifetime pandemic.

Chief economist Nariman Behravesh of the forecasting firm IHS Markit described the third-quarter growth spurt as a «bounce and fade.

«There was a lot of pent-up demand early, Behravesh said. «Now that’s spent itself. And then you’ve got the rising infection rates which are making everybody very cautious. And then the fact that we haven’t had any additional stimulus to help us through this next phase. All of that suggests we’re looking at pretty limp numbers going forward.

Moving beyond the annualized figure, however, the economy actually grew about 7.4% during July, August and September, after shrinking 1.2% in the first three months of the year and another 9% in the second quarter.

Election
Trump’s And Biden’s Plans For The Economy

With just five days before the presidential election, the Trump administration has seized on the GDP numbers as evidence that the economy is rapidly healing, despite a rising number of new COVID-19 infections.

«This is a strong, V-shaped recovery, White House economic adviser Larry Kudlow told CNBC earlier this week, before the official release. «The third quarter is going to be very positive, no question about that.

Independent forecasters are less bullish. While unemployment has declined from its springtime peak, only about half the 22 million jobs that were lost in March and April have been recovered.

«It’s a very, very uneven distribution of the pain and the benefits from this recovery, Behravesh said. «There are a lot of jobs in tourism, for example, which we may not get back for five [or] 10 years.

Much of the GDP growth attributed to the third quarter actually came late in the second quarter. Job gains peaked in June and have declined in each of the three months since.