Following a decline of 31.4 per cent in the second quarter, the United States Commerce Department is reporting record GDP growth of 33.1 per cent (annualised) for the third quarter.
This in effect means the economy has gained 65 per cent of what was lost in the second quarter.
The Bureau of Economic Analysis (BEA) reads this as real GDP growth of 7.4 per cent
This comes as spending activity is beginning to pick up and businesses begin to throw off mothballs. This figure sets a new record since GDP data began being compiled more than 70 years ago.
One of the biggest drivers of this good news has been the CARES Act which was the foundation of a US$2.7-trillion stimulus package.
Trump has been eager to reboot the economy and is encouraging American firms to get back to work. He feels vindicated, tweeting, “GDP numbers just announced, Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!! So glad this great GDP number came out before November 3.”
He has insisted that the economy was motoring along very well until the coronavirus took hold earlier this year. He has vowed that next year will see the country’s greatest economic performance.
But to preside over that, he first has to win next week’s presidential election where the polls put Joe Biden ahead.
There may be storm cloud ahead.
A new stimulus agreement is yet to be agreed upon as House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin battle over terms and conditions. Then the virus seems to be in its third wave as infections and deaths begin to climb again. If Biden should win he has not ruled out placing the country in another lockdown which will further stagnate the economy. Europe is again retreating into lockdown as the virus there comes back with a vengeance. Will this have a contagion effect on the world’s largest economy? It may well do.
The House Speaker is looking for a stimulus agreement of a little more than US$2 trillion and the White House has now upped its offer to US$1.9 trillion. Many Democrats would like to see Pelosi take that deal but she is holding out.
“I want a bill for two reasons. First and foremost the American people need help. They need real help and second of all we have plenty of work to do in a Joe Biden administration,” said Pelosi earlier today.