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GDP Grew at 33.1% Annualized Pace in 3Q, Beating Expectations

GDP Grew at 33.1% Annualized Pace in 3Q, Beating Expectations

Also, the weekly first-time unemployment numbers went down 751,000 from 778,000 the week before.

The gross domestic product (GDP) for the third quarter soared at a 33.1% annualized pace, beating all expectations after a sour second quarter.

GDP

Consumer activity counts for two-thirds of the GDP. People flocked to stores, bars, restaurants, salons, and other places as the country opened up after a long shutdown due to the coronavirus.

Personal spending went up 40% at an annualized pace. The numbers for real estate and business investment also went up:

The increase in real GDP reflected increases in personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans) and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The increase in PCE reflected increases in services (led by health care as well as food services and accommodations) and goods (led by motor vehicles and parts as well as clothing and footwear). The increase in private inventory investment primarily reflected an increase in retail trade (led by motor vehicle dealers). The increase in exports primarily reflected an increase in goods (led by automotive vehicles, engines, and parts as well as capital goods). The increase in nonresidential fixed investment primarily reflected an increase in equipment (led by transportation equipment). The increase in residential fixed investment primarily reflected an increase in brokers’ commissions and other ownership transfer costs.

Current‑dollar GDP increased 38.0 percent, or $1.64 trillion, in the third quarter to a level of $21.16 trillion. In the second quarter, GDP decreased 32.8 percent, or $2.04 trillion (tables 1 and 3).

The price index for gross domestic purchases increased 3.4 percent in the third quarter, in contrast to a decrease of 1.4 percent in the second quarter (table 4). The PCE price index increased 3.7 percent, in contrast to a decrease of 1.6 percent. Excluding food and energy prices, the PCE price index increased 3.5 percent, in contrast to a decrease of 0.8 percent.

Unemployment

The weekly first-time unemployment numbers went down 751,000 from 778,000 the week before.

The continuing jobless claims also went down 709,000 to 7.75 million the week of October 17.

The four-week average for initial claims dropped to 787,750 from 812,250.

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Comments

the_last_l3oyscout | October 29, 2020 at 9:07 am

In the subheading or whatever it is called and near the end of the article “went down 751,000 from 778,000 “, it should read “went down TO 751,000”.

Orange man bad.

Media meltdown spin:
This is all great but it comes at the cost of 225,000 lives! I’m sure that all those people that lost grandma will be thrilled that people are getting rich thanks to Trump while they have an empty chair at their Thanksgiving table (except in California where Newsom canceled it).

Does anyone believe that the Dow dropping 900+ points yesterday (6 days before the election) was really due to a global increase in Wuhan virus cases?

    The Friendly Grizzly in reply to gibbie. | October 29, 2020 at 10:56 am

    No.

    SCOTUS, with both Roberts AND Kavanaugh joining the liberals, giving extended mail time for ballots way past election day in NC. That now means both PA and NC are tied up and prompt election results are highly unlikely. The market hate uncertainty and this also increases the chances of successful ballot fraud.

    Of course, IMO Biden winning would be a disaster for the economy. However, with the polls tightening, the market should be going the other way with Trump’s chances improving (if that is what was driving prices).

Perspective time once again, boys and girls.

With regard to the 33% increase in the GDP for the 3Q, what do you expect? The entire US economy was tanked for the entire 2Q, including the consumer market, resulting in a reduction in the GDP of 32.8% for 2Q. When the lockdown was mostly lifted, we would expect a huge jump in the quarterly GDP. So, if we subtract the decline in the GDP in 2Q from the increase in the GDP for 3Q, we end up with a net gain of around 3%. So, while this is good news, we have to look at the actual dollars spent for all of 2020 as opposed to 2019 to accurately gauge the economic health of the nation. Also, remember this, it is important. The US accounts for 27% of the entire global consumer market. We are largely self sufficient over the short haul. But, the global economy has also been shutdown. And, sooner or later, the US economy is going to need access to that market to continue to grow.

Now the first time unemployment figures are encouraging. However, they are still higher than the reduction in long term unemployment benefit recipients. This means that we are still bleeding jobs, especially when some of the reduction in long term recipients is the result of people running out the clock on their benefits, not being reemployed.

My point is that the unnecessary lockdown of the economy has resulted in long term degradation that economy. It is likely to take many more months, if not years for our economy to rebound to the point that it was at in January, 2020.

    jb4 in reply to Mac45. | October 29, 2020 at 12:53 pm

    Well put. I come down on the side of years to fully recover, if ever for some parts of the economy. A large percentage of restaurants will fail. The riots, looting and arson have permanently destroyed many businesses and will depress new business formation. The out-migration from cities will cost a lot of jobs there. A lot of these folks will not readily find replacement jobs, or only ones paying much less.

When I use Google Chrome on my iPhone to read LI, it heats the phone and discharges the battery.

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