US economy expands at record 33.1% pace after coronavirus plunge

Washington: The US economy bounced back with a record yet temporary surge of growth in the third quarter as businesses reopened and stimulus cash powered consumer spending — reversing much of the collapse stemming from coronavirus lockdowns.

Just as the second-quarter plunge in output was the biggest in seven decades of data, so too was the third-quarter recovery: Gross domestic product grew 7.4%, a quarterly gain that equals an annualised pace of 33.1%, the Commerce Department’s initial estimate showed on Thursday.

The figure topped economists’ estimates for a 32% increase, which was already well above forecasts three months ago for an 18% gain. Personal spending fueled the surge in growth, climbing an annualised 40.7%, also a record, while business investment and housing also posted strong increases.


While the report makes clear that the economy has found a solid footing for now, analysts caution that growth will be much more modest and choppy in months to come.

Moreover, there are still nearly 11 million fewer workers on payrolls than there were before the pandemic hit, and analysts say a full recovery in GDP is at least several quarters away.

Even with the outsize gain, GDP is 3.5% below its pre-pandemic peak, and the virus will keep business and jobs depressed in sectors like travel and restaurants.