3rd quarter growth (Image courtesy BEA)
The Bureau of Economy Analysis on Thursday announced that the U.S. economy grew by a stunning 33.1% during the third quarter, giving support to President Trump's confidence in a "V-shaped" recovery from the damage sustained from the Chinese COVID-19 pandemic.
The president often has explained he is confident of a quick rebound from the damage the nation sustained by the closures made necessary by the coronavirus that originated in Wuhan, China, and spread quickly around the globe, killing hundreds of thousands of people.
The reference is to a quick fall in the economy when many functions were forced to shut down – sometimes for months – because of the threat of the COVID-19 spreading through contact among people. But a V shape also includes a very quick recovery, which appears to have happened.
"Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020, according to the 'advance' estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent," the federal agency said on Thursday.
"The increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified," the agency reported.
"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."
The BEA said, "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."
The report said, "Current-dollar personal income decreased $540.6 billion in the third quarter, in contrast to an increase of $1.45 trillion in the second quarter. The decrease in personal income was more than accounted for by a decrease in personal current transfer receipts (notably, government social benefits related to pandemic relief programs) that was partly offset by increases in compensation and proprietors' income."
"Disposable personal income decreased $636.7 billion, or 13.2 percent, in the third quarter, in contrast to an increase of $1.60 trillion, or 44.3 percent, in the second quarter. Real disposable personal income decreased 16.3 percent, in contrast to an increase of 46.6 percent."
A commentary at The Gateway Pundit noted the economy's performance "crushed all previous records."
"This record may never be broken," the commentary said.
Fox Business noted that the full explanation is that the growth in the economy was "at a record-shattering pace," but it actually was a recovery from declines earlier in the year – triggered by the coronavirus.
Fox reported, "The Commerce Department calculates the GDP on a quarter-over-quarter basis as if that level of growth were sustained for a full year; in times of huge swings up or down, it can exaggerate both the decline in growth and the subsequent rebound. Because third-quarter growth will be measured against second-quarter growth -- a historically low baseline -- any bounceback at all would generate huge growth."
The nation lost millions of jobs during the COVID-19 shutdowns, of which more than half already have been restored.
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