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US GDP increases to record high as economy reopens following spring lockdown

By Jesse Stiller
Nation and World Editor

The U.S. gross domestic product (GDP) increased by its highest margin ever in the third quarter as the economy emerged from a near-total lockdown of the economy to stop the spread of the Covid-19. As reported by CBS News, the economy grew at a 33 percent annualized growth rate in the third quarter of 2020.

“‘The record headline growth number looks spectacular, but it leaves the level of GDP 3.5 percent lower than in Q4 last year, before Covid struck,’” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics, according to CBS News. 

The gain came amid another record last quarter, as reported by CNBC, when the GDP dropped by 31.4 percent as economic activity was artificially shut down in a response to Covid-19. That loss was the single-worst drop in GDP in recorded history, eclipsing numbers during the great depression.

According to CNBC, personal consumption, which was partly boosted by increased unemployment benefits and stimulus checks, grew at a 40 percent annual rate last quarter, while gross private domestic investment doubled. 

The United States saw its fastest period of growth ever as the economy re-emerged from a near-total lockdown earlier this year (Envato Elements).

The release, as reported by CNBC, came five days before election day, which has been hotly contested this year in a number of key battleground states such as Michigan and Pennsylvania. 

The growth, however, is not expected to last according to USA Today, as economists point to several factors, including the lack of a new stimulus package in the U.S. that could potentially slow down the recent growth that has taken place.

Economist Gregory Daco of Oxford Economics told USA Today, “‘We anticipate a much slower second phase of the recovery,’” and that the overall GDP of the country for the year was 3.5 percent lower than what it had been at the start of the year. Gus Faucher, an economist from PNC Financial, said that the number would not return to pre-pandemic levels until late next year. 

According to USA Today, experts are growing increasingly worried about the rise of Covid-19 cases again in the continental U.S. that could spark new restrictions and hurt the rebound of the economy.

“We have a pretty noxious brew developing with the pandemic intensifying, the lack of any further government stimulus and signs showing that the economy is already slowing pretty significantly,” Mark Zandi, chief economist at Moody’s Analytics, told PBS about the current state and future outlook of the economic recovery.

PBS reported that Goldman Sachs, a major investment firm and one of the blue-chip analytical firms for growth in the economy, had slashed their outlook from six to three percent growth for the next year.

Zandi did tell PBS that he expected the economy to grow at a 4.2 percent annualized pace in 2021, which would be one of the best paces on record if it were to occur, but did warn that the job market would not recover until 2023.

According to PBS, the Dow Jones Industrial Average, the benchmark for the stock market, still dropped by 3.5 percent as new lockdowns in Europe are beginning to affect the economic supply chain across the world, and as worries about cases continued to stoke uneasiness.

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