The numbers: The record increase in U.S. economic growth over the summer in the aftermath of the coronavirus pandemic lockdowns was revised slightly higher to a 33.4% annual pace, the Commerce Department said Tuesday.
The increase in gross domestic product, the official score card for the U.S. economy, was previously put at 33.1% during the three month period from July to September.
The rebound followed a record 31.4% decline in the April-June quarter reflecting the impact of business lockdowns to combat the coronavirus pandemic.
What happened: Consumer spending, the main engine of the economy, was revised slightly higher along with business fixed investments. These were partly offset by a downward revision to exports.
Big picture: After two quarters of distorted GDP data, the economy will return to a somewhat more normal growth rate in the fourth quarter of 2020. Economists are expecting growth at a 3.5% annualized rate in the fourth quarter. The passage by Congress of another COVID aid package on Monday could bolster the outlook for the first quarter. Some economists had been worried about a double-dip recession.
But for 2020, the economy has proven more resilient than expected. The Federal Reserve recently revised up its 2020 GDP forecast to a decline of 2.4% from prior estimates of a 3.7% drop.
What are they saying? “On the eve of 2021, the economy carries very little momentum as a catastrophic third Covid wave is limiting mobility, curbing employment and constraining demand. The $900 billion fiscal aid package is months late and will likely fall short of what is needed to prevent a rough winter, but it’s better than nothing,” said Gregory Daco, chief U.S. economist at Oxford Economics.
Market reaction: The Dow Jones Industrial Average
DJIA,
-0.22%
was off 120 points in mid-morning trading on Tuesday on weak confidence data and worries about new strain of the coronavirus in the UK.
