Third Quarter Gross Domestic Product Sees Historic Rise
October 29, 2020
After a historic GDP contraction in the second quarter, caused by the pandemic and ensuing economic shutdown, expectations for the third quarter were high. The U.S. economy managed to top these lofty expectations, growing at an annualized 33.1% pace in the three months between July and September. This is the fastest pace ever, and beats the economist forecast of 32%.
The rebound was largely driven by a resurgence of consumer spending, which accounts for nearly 70% of total GDP. Following lockdowns on most non-essential businesses, Americans were eager to get back to shopping in retail stores and going out to bars and restaurants. Personal consumption increased 40.7% in the third quarter.
Despite the impressive performance, some economists have noted that this still leaves growth 3.5% lower than its level from the end of 2019. Others have also cautioned that growth may slow in the final three months of the year, especially as the surge of coronavirus cases harms consumer confidence and forces new restrictions on businesses.