US economy posts record third quarter growth

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The US economy grew at an unprecedented pace in the third quarter, as the government provided more than US $ 3 trillion in pandemic relief that fueled consumer spending, but deep scars from the COVID-recession. 19 could take a year or more to heal.Gross domestic product rebounded at an annualized rate of 33.1% in the last quarter, the Commerce Department said in its preliminary estimate on Thursday. It was the fastest pace since the government began keeping records in 1947 and followed a historic 31.4 percent withdrawal rate in the second quarter.

The GDP report – one of the last major economic dashboards ahead of next week’s presidential election – will do little to alleviate the human tragedy inflicted by the coronavirus pandemic, with tens of millions of Americans still unemployed and more than 222,000 dead.

With five days to go until Election Day, President Donald Trump, lagging behind in most national opinion polls, will likely take the dramatic rebound in GDP as a sign of recovery. But U.S. output remains below its level in the fourth quarter of 2019, a fact that Trump’s Democratic challenger Joe Biden will almost certainly point out, as well as signs the growth spurt is quickly running out of steam.

Economists polled by Reuters had forecast economic growth of 31% in the July-September quarter. The economy entered recession in February.

“We expect minimal growth [the fourth quarter] as the anxiety of consumers and businesses can only increase with the increase in viral infections, ”Sal Guatieri, BMO’s senior economist, said in a commentary.

With no further US government assistance in sight this year, Goldman Sachs has cut its growth forecast for the current fourth quarter to an annual rate of three percent from six percent.

Declining unemployment benefit claims

The government’s bailout provided a lifeline for many businesses and the unemployed, boosting consumer spending, which alone fueled the surge in GDP. But government funding has been exhausted and no deal is in sight for another round of relief. New cases of COVID-19 are on the rise across the country, placing restrictions on businesses like restaurants and bars.

Just over half of the 22.2 million jobs lost during the pandemic have been recovered, and layoffs persist.

A separate report from the Labor Ministry on Thursday showed that 751,000 people had applied for unemployment benefits in the week ending October 24, up from 791,000 in the previous period. Although claims fell from a record 6.867 million in March, they remain above their high of 665,000 recorded during the 2007-09 recession.

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