WASHINGTON (AP) — The U.S. economy grew at a record 33.1% annual rate in the July-September quarter but has yet to fully rebound from its plunge in the first half of the year — and the recovery is slowing as coronavirus cases surge and government aid dries up.
The Commerce Department’s estimate Thursday of third-quarter growth showed that the nation has regained only about two-thirds of the output that was lost early this year when the eruption of the virus closed businesses, threw tens of millions out of work and caused the deepest recession since the Great Depression.
The economy is now weakening again and facing renewed threats. Confirmed viral cases are surging. Hiring has sagged. Federal stimulus has run out. With no further federal aid in sight this year, Goldman Sachs has slashed its growth forecast for the current fourth quarter to a 3% annual rate from 6%.
Gregory Daco, chief U.S. economist at Oxford Economics, noted that the record-high third quarter growth in the nation’s gross domestic product “tells us little, if anything, about momentum heading into” the current quarter.
“The strong GDP performance gives a false impression of the economy’s true health,” Daco wrote in a research note. “Much of the Q3 gain came from carry-over effects from fast progress in May-July… We anticipate a much slower second phase of the recovery, with output not reclaiming its pre-COVID level until late 2021.”
