The third quarter was a time of growth for the U.S. economy, and the big question five days before the election is how the news, released Thursday by the Commerce Department, will affect the results on Nov. 3.
The U.S. government poured more than $3 trillion worth of pandemic relief into the economy, which led to fueled consumer spending. Because of the coronavirus pandemic, the U.S. economy had it’s worst quarter ever in the second quarter of 2020, but rebounded, and in the third quarter it grew at its fastest pace ever as the nation started to rebound.
A key area economists look at is gross domestic product (GDP), a measure of the total goods and services produced from July through September, and the GDP expanded at a 33.1% annualized pace. This followed a 31.4% plunge in the second quarter, and it beat the estimate of 32% from economists surveyed by Dow jones.
How dramatic of an increase in the GDP was this? The previous best burst was in 1950, when GDP grew at 16.7%.
“It’s obviously good news that the economy bounced back in the third quarter,” Eric Winograd, senior economist at AllianceBernstein told CNBC. “There’s still a lot of work to do here and the pace of improvement … is going to slow.”
President Trump will most likely use this news to show how the economy has recovered at a record pace under his watch, while Joe Biden will almost certainly try to spin the news in the other direction, saying the signs show that the dramatic growth spurt is losing steam.
This news, along with strong quarterly earnings reports from tech companies, had a positive impact on stock prices Thursday, as the Dow Jones Industrial Average traded 150 points higher, the S&P 500 was up 1% and the Nasdaq Composite improved by 1.3% over Wednesday.