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Data released Thursday morning show that the U.S. economy has experienced record-breaking growth during the past three months, but also reveal that the country has a long way to go to get out of the hole created by the COVID-19 pandemic. The Department of Commerce’s preliminary estimate of third-quarter gross domestic product growth, the last major economic report to be released before the presidential election on Nov.3, estimates that the economy grew by 33.1 percent from July through September. That comes after a stunning 31.4 percent contraction in the previous three months—during which much of the country was paralyzed by coronavirus-related economic shutdowns. Both those figures are a bit misleading. Because the federal government reports GDP figures in « annualized » terms, outlier quarterly numbers end up being exaggerated. « What actually happened was that activity in April–June was 9% lower than in January–March, which in turn was about 1% lower than in October–December of 2019, » explains Barron’s. « To be clear, the coronavirus contraction was catastrophic and without precedent in its combination of speed or severity. But it wasn’t equivalent to losing a third of the economy for months at a time. » The same thing is happening in reverse now. There’s no doubt that the economy has bounced back as lockdowns have lifted and businesses have reopened in recent months, but the data does not indicate a full recovery. Economists for JPMorgan, an investment bank, note that the economy remains about 3 percent smaller than it was at the end of last year. And while the unemployment rate is falling after hitting a peak of 14.7 percent earlier this year, there are millions of Americans still out of work due to the pandemic. Important to keep in mind for this morning’s GDP release… even if Q3 bounce matches estimates, we’ll still be down 4% from end of 2019 … for context, even at lowest level, GDP only sank by 3.98% at depths of GFC @biancoresearch @bloomberg @USCBO @CommerceGov pic.twitter.com/VSUUSwpaLO Liz Ann Sonders (@LizAnnSonders) October 29,2020 Thursday’s report will serve as fodder for both President Donald Trump and former Vice President Joe Biden as they make their closing pitches to voters in the presidential campaign’s final week.
