The US economy has rebounded strongly from the record-breaking crisis at the start of the coronavirus pandemic, according to government figures released Thursday, giving Donald Trump a key talking point days before the election.
According to the Bureau of Economic Analysis, gross domestic product (GDP) grew at an annualized rate of 33.1% between July and September, and rose 7.4% from the previous quarter. The previous record was a quarterly increase of 3.9% in 1950.
Trump was quick to claim the credit, tweeting that the numbers were “the biggest and the best in our country’s history, and not even close.”
But the figures show the United States still has a long way to go to escape the devastation wrought by Covid-19 and has been boosted by additional unemployment payments, business loans and out-of-pocket payments, none of which are was replenished in the fourth quarter.
The news comes just five days before the U.S. election and is the last major economic release before the polls close. Even before the numbers were released, the Trump campaign ran ads touting “THE FASTEST GDP GROWTH IN HISTORY.”
However, big problems remain for the economy. The growth rate announcement came on the same day that the Labor Department announced that an additional 751,000 people filed for unemployment last week and that the unemployment rate, at 7.9%, is twice as high. high only in February before the pandemic hit the United States.
A closer look at the numbers shows that America’s economic woes are far from over. Thursday’s numbers follow an equally historic recession in the second quarter. The US economy shrank by a revised annual rate of 31.4% between April and June, its sharpest contraction since World War II, as much of the country locked itself in to control the virus.
The annual rate suggests that the economy will continue on its current trend for the remainder of the year. But such huge swings make annualized numbers misleading – no one expects these massive losses or gains to continue, but most economists expect the US economy to be smaller by the end of the year. year than it was at the beginning.
Gus Faucher, chief economist at PNC, said the figures represented “real growth” but added: “there is still a long way to go before they get back to normal.”
The decision to reopen much of the economy has given a huge boost, especially in consumer spending, which has driven much of the recovery. But it comes as coronavirus infections skyrocket in the United States. Covid cases hit new highs over the weekend and the United States now has the highest number of infections, over 8.6 million, and deaths, over 225,000, worldwide.
There are also signs that the recovery has slowed in recent months. Unemployment claims remain at historically high levels and the number of new jobs created has fallen month on month. The economic situation of women, people of color and adolescents remains difficult. The unemployment rate fell to 7.9% for the entire American population in September. For black Americans, it was 12.1% and for black teens (16 to 19) it was over 20%.
GDP is the broadest measure of the economy and includes personal consumption, business investment, government spending, and net exports. This figure has often been criticized as a measure of economic health – GDP growth, for example, has done little to tackle growing income inequality.
For some still feeling the impact of the pandemic and accompanying recession, the latest GDP news was hardly reassuring, especially as Congress remains deadlocked on further stimulus.
Tim Swartz in Mesa, Ariz., Stopped collecting unemployment benefits on Sept. 5 after the unemployment office reported an issue with his payments. When the pandemic hit, he had to stop working as an Uber driver and delivery man to care for his five children, one of whom had special needs. His wife works full time as a medical technician in an establishment for patients with Alzheimer’s disease.
“I can’t get answers from anyone on the phone or by email. I’m behind on rent and utilities, ”Swartz said. He has now received an eviction notice. “I don’t know how we’re going to pay off the outstanding rent and utility balances,” he said.
“A lot of us are losing hope with everything we’ve worked so hard for,” Swartz said. Three of her children recently had to resume online learning after being exposed to classmates who tested positive for the coronavirus, further delaying her return to work. “Without any relief program to help keep the economy running, I don’t see much growth in the near future and sadly even darker times for American families.”