The U.S. Department of Commerce said on Thursday that the anticipated second quarter gross domestic product estimate showed the U.S. economy grew 33.1 percent, recovering from a 31.4 percent decline reported in the second quarter. .
According to consensus estimates, economists expected GDP to grow 32% in the third quarter.
“The third quarter GDP increase reflects continued efforts to reopen businesses and resume activities that have been postponed or restricted due to COVID-19. The full economic effects of the COVID-19 pandemic cannot be quantified in the estimate of GDP for the third quarter of 2020 as the impacts are usually incorporated into the source data and cannot be separately identified, ”the report states.
Gold prices are trading near session lows in initial reaction to the latest economic data. December gold futures last traded at $ 1,869.20 an ounce, down 0.5% on the day.
Economists note that third quarter growth is the best on record, following the worst contraction in history seen in the second quarter.
“These are all jaw-dropping numbers, but they were widely expected,” said Adam Button, chief currency strategist at Forexlive.com.
Looking at some of the report’s evidence, personal consumption in the third quarter increased more than expected, rising 40.7%. Economists expected a 38.9% increase.
At the same time, business investment rose 20.3%, following a 27.2% drop in the second quarter.
Trade data for the third quarter weighed on GDP slightly. The report says exports increased 59.7% between July and September, compared to 64.4% in the second quarter. However, imports grew at a faster pace, increasing 91.1%, after falling 54.1% in the second quarter.
Looking at inflation data, the GPD price index rose 3.6% in the third quarter, beating consensus estimates. Economists expected an increase of 2.9%.
The core personal consumption expenditure index rose 3.5% in the third quarter, missing expectations. Economists expected a 4.0% hike in core PCE.
Although the latest data from GPD was better than expected, Katherine Judge, senior economist at CIBC, said the United States still faces a long recovery. She added that economic growth is still down 3.5% for the year and future growth remains uncertain.
“While this is an encouraging data impression, the fourth quarter is expected to show a significant deceleration in growth, as Covid cases are now increasing at a time when the fiscal stimulus is fading, suggesting that the economy will need additional support to stay on track until a vaccine is widely available, ”she said.
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.