The U.S. economy grew at a record annualized rate of 33.1% between July and September, clawing back much of the ground it had lost during the coronavirus-fueled shutdown earlier in the year, the Commerce Department said Thursday.
The government reports gross domestic product — the total value of goods and services the economy produces — as an annualized number. On a non-annual basis, the country's output plunged 10% in the first half of the year before growing 7.4% in the third quarter.
Increased consumer spending, private investment and exports drove the increase, which was partly offset by falling government spending as stimulus funds dried up and states slashed their budgets.
The rebound puts the nation's GDP at $21.16 trillion for the three months ending in September. That's below its level at the end of last year.
"The record headline growth number looks spectacular, but it leaves the level of GDP 3.5% lower than in Q4 last year, before Covid struck," Ian Shepherdson, chief economist with Pantheon Macroeconomics, told investors in a research note.
The economy is now weakening again and facing renewed threats, the Associated Press reports. Coronavirus cases are surging, and hiring has sagged. Government stimulus also has largely run dry. With no further federal aid in sight this year, Goldman Sachs has slashed its growth forecast for the current fourth quarter to a 3% annual rate, down from 6%.
"We have a pretty noxious brew developing with the pandemic intensifying, the lack of any further government stimulus and signs showing that the economy is already slowing pretty significantly," Mark Zandi, chief economist at Moody's Analytics, told the AP. Zandi predicted GDP could regain its pre-pandemic levels by early next year, while the job market might take another two or three eyars to fully recover.
"Many of the jobs in retailing, leisure and airlines have been permanently lost," he said, "and those folks will have to find different work, and that will take time."
More than 22 million people are currently receiving jobless benefits, the Labor Department said in a separate report Thursday. The economy is about 11 million job short of its pre-pandemic levels.