3Q GDP, annualized quarter-over-quarter: 33.1% vs. 32.0% expected
Q3 GDP: US economic activity rose at a record pace after pandemic-induced slump
Emily McCormick
finance.yahoo.com /news/q3-gdp-gross-domestic-product-usa-coronavirus-pandemic-181533194.html
'The economy has enough momentum that it can get through Q4 without additional stimulus': Economist
U.S. economic activity surged at a record clip for the July through September period, as an initial easing of virus-related lockdowns allowed business activity to return after a historic slump.
The Bureau of Economic Analysis released its advance print on third-quarter gross domestic product (GDP) at 8:30 a.m. ET on Thursday. Here were the main metrics from the report, compared to consensus estimates compiled by Bloomberg:
3Q GDP, annualized quarter-over-quarter: 33.1% vs. 32.0% expected, -31.4% in the second quarter
3Q Personal Consumption: 40.7% vs. 38.9% expected, -33.2% in the second quarter
3Q GDP Price Index: 3.6% vs. 2.9% expected, -1.8% in the second quarter
3Q Core Personal Consumption Expenditures, quarter-over-quarter: 3.5% vs. 4.0% expected, -0.8% in the second quarter
Prior to the pandemic period, the largest-ever quarterly rise in GDP had been a 16.7% annualized increase in 1950. The rise in third quarter 2020 economic activity was expected to be nearly twice that, with a record jump set to follow the record 31.4% slide earlier this year.
The advance was expected to come primarily from strength in personal consumption, which comprises about two-thirds of domestic economic activity.
“A substitution in favor of goods spending helped offset lingering weakness in services,” Paul Ashworth, chief U.S. economist for Capital Economics, said in a note ahead of the release.
That dynamic has been evident in the monthly retail sales report, which grew in each of the past five months ending in September. A boost from Washington’s first round of $1,200 stimulus checks and weekly $600 in augmented federal unemployment benefits still had a lingering effect on consumer spending at the beginning of the third quarter, helping keep expenditures on products robust even as spending on travel and other services stayed low.
Other areas of the economy were expected to be more mixed as contributors to third-quarter GDP. Residential investment likely jumped given the strong surge in housing market activity into early fall, though non-residential structure investments were probably still weak, Ashworth noted.
“We expect a positive contribution from a slower inventory drawdown will roughly offset a drag from net external trade,” Ashworth said. The goods trade deficit was still wider in September this year than in the same month last year, with the coronavirus pandemic weighing heavily on global commerce.
“Consumer goods imports have rebounded particularly strongly, but some key export sectors — particularly aircraft — are still getting hammered by the ongoing effects of the pandemic,” he added.
NEW YORK, NEW YORK - SEPTEMBER 20: Dozens of high end luxury stores remain shuttered and emptied after six months of the COVID-19 pandemic, a severe economic downturn, and a midtown Manhattan emptied of office workers, as seen on September 20, 2020 along Madison Avenue in New York City's Upper East Side. (Photo by Andrew Lichtenstein/Corbis via Getty Images)
Still, even the record increase in GDP expected would likely not go far enough to bring U.S. output to pre-pandemic levels. GDP fell to a seasonally adjusted annual rate of $17.3 trillion in the second quarter this year (based on chained 2012 dollars), down from $19.24 trillion in the fourth quarter of 2019 before the pandemic began to take in effect on the domestic economy.
And as always, the quarterly U.S. GDP report served as a backwards-looking view of the state of the economy, especially now given the ever-changing landscape induced by the coronavirus pandemic. High-frequency data including weekly jobless claims figures have pointed to stubborn weakness in the labor market, and a lack of another fiscal stimulus package out of Washington has threatened to weigh on the economic recovery during the current quarter. Coronavirus cases remain high in the U.S. and Europe, raising the specter of further business restrictions to try and curb the spread.
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