The US economy grew at a record pace in the third quarter of the year after the devastation of the spring, according to figures that will no doubt please President Donald Trump ahead of the election.
US GDP grew at a quarterly rate of 7.4 per cent, the Bureau of Economic Analysis said, following a nine per cent collapse in the second quarter.
It amounted to a 33.1 per cent third-quarter increase on an annualised basis, following a 31.4 per cent annualised drop in the previous three months.
The figure smashed all records for quarterly growth. But it was from a historically low base and the path ahead will be rocky for the world’s biggest economy.
Coronavirus cases have surged in recent weeks, leading states to consider new restrictions. And Republicans and Democrats cannot agree on a stimulus package that economists say is sorely needed.
Despite the jump in GDP, the economy was still 3.5 per cent smaller than at the end of last year.
Nonetheless, the US economy has grown more rapidly than many of its peers. For example, in August UK GDP was still 9.2 per cent smaller than it was before the pandemic in February.
Americans start to spend again but face headwinds
The BEA said there was a rapid increase in personal consumption expenditure. In particular Americans began to spend heavily again on goods. Spending on services was more muted due to ongoing social distancing.
The figures are the last big economic update before the US presidential election on 3 November.
President Trump trails his Democrat rival Joe Biden by around nine points in the polls. His handling of the pandemic appears to have been a major political liability.
However, since the historic crash in GDP Trump has touted the economy’s recovery. In particular he has pointed to the rapid recovery in the stock market and the drop in unemployment, although the latter remains at historic highs.
Paul Ashworth, chief US economist at Capital Economics, said: “The initial recovery in GDP after the first wave of lockdowns were lifted was stronger than we originally anticipated.”
But he said that “further progress will be much slower”. He said soaring coronavirus infections and a lack of stimulus until after the election would weigh on fourth-quarter figures.