The U.S. economy grew by an annual rate of 33.1 percent in the third quarter of the year, the U.S. Bureau of Economic Analysis reported today.
The growth in the economy in July through September was greater than the record-breaking 31.4 percent decline in the second quarter. The quarterly growth nearly doubled the previous post World War II high of 16.7 percent in 1950.
The economy still has farther to go to return to the highs reached in February of this year. U.S. gross domestic product is currently 3.5 percent below the high reached just before the pandemic and government-imposed shutdown.
The economy continues to outperform expectations. The improvement outdid economists’ projections of a 32 percent annualized increase for the quarter. Those estimates had already moved far above the 18 percent gain predicted three months ago.
Personal spending grew by 40.7 percent annualized, a record improvement.
Unemployment had fallen to 7.9 percent at the end of September, from a high of 14.7 percent in April. The unemployment rate in February, before the coronavirus lockdowns, was 3.5 percent. Just over half of the 20 million jobs lost during the government-imposed lockdowns have been recovered thus far.
The economic surge for the quarter is the “Biggest and Best in the History of our Country, and not even close,” President Donald Trump tweeted. Democratic presidential candidate Joe Biden’s “proposed record setting tax increase would kill it all,” Trump tweeted.
Biden said in a press statement, “[W]e are in a deep hole and President Trump’s failure to act has meant that Q3 growth wasn’t nearly enough to get us out of [sic]; the recovery is slowing if not stalling.”
“@KamalaHarris and I won’t just build back to the way things were before these crises—we’re going to build back better and create a new American economy,” Biden tweeted after the report of the record-smashing economic improvement.
The economy is running like the greatest horse in racing history, and it needs to keep its current rider, says Heritage Foundation Visiting Fellow Steven Moore.
“We are riding on the back of Secretariat with this economic comeback,” said Moore. “Now is not the time to be switching horses.”
Even more impressive is the fact that the economic growth numbers were not inflated by government spending, says Moore.
“Best stat of all: this was all private-sector growth,” said Moore. “Government spending actually declined in Q3.”
The record economic improvement reflects the nature of the U.S. economy, as the main limits on growth are government interference and taxation, says Brian Domitrovic, Ph.D., the Richard S. Strong Scholar at the Laffer Center.
“The GDP had better bounce back,” said Domitrovic. “This is the American economy, and its natural course is to boom. The best part of the report was the stagnation in government spending. Now may it fall.”
Government lockdowns are the only thing that halted the U.S. economy in 2020, and the third-quarter improvement will continue unless governments shut it down again, says Donald Devine, a senior scholar at the Fund for American Studies who served as director of the U.S. Office of Personnel Management under President Ronald Reagan.
“A third quarter economic growth of over 7 percent—or 33 percent at an annual rate—doubles the second-highest rate ever, and to do that after a long, virus-prompted economic shutdown is just unbelievable,” said Devine.
“The only thing that can stop the recovery is not more COVID cases, which can be handled without a shutdown, but an irrational political- and media-inspired fear,” said Devine.