WASHINGTON – The U.S. economy surged 7.4% from July to September, the country’s Commerce Department reported Thursday, as businesses began to reopen and consumers, supported by government coronavirus relief assistance, started spending again amid the ongoing pandemic.
The third quarter gain partially offset the 9% plunge in the April-to-June period when much of the country’s economic life was shut down as the coronavirus swept into the country from China and Europe.
The third quarter advance is the last major economic report before next Tuesday’s presidential and congressional elections, and it could buttress claims by Republican President Donald Trump in his contest against Democratic challenger Joe Biden that the country is on pace for a rapid recovery.
Trump, in a Twitter comment, called the new figure the “Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!! However, Sleepy Joe Biden and his proposed record setting tax increase, would kill it all. So glad this great GDP (Gross Domestic Product) number came out before November 3rd.”
Biden, however, said in a statement, “Yes, GDP rose last quarter, but visits to food banks haven’t slowed, and poverty has grown. African Americans and Latinos still face double-digit unemployment rates. The added caregiving burden in the wake of Trump’s failed pandemic response has forced many women to drop out of the labor force altogether.”
Biden concluded, “The recovery is slowing if not stalling; and the recovery that is happening is helping those at the top but leaving tens of millions of working families and small businesses behind.”
The three-month surge translated into a 33.1% annualized rate, a hugely unsustainable figure in a country that is more accustomed to annual gains of 2% to 3%.
Economists say they expect the U.S. economy, the world’s largest, to advance again in the last three months of the year, but not as fast as in the third quarter. The U.S. economy for the year is expected to finish smaller than at the end of 2019.
Uncertainty lies in the fact that the U.S. is now recording soaring numbers of new coronavirus cases – 70,000 or more daily in recent days – that could curb commerce, as some state officials reimpose restrictions on businesses they previously had lifted.
Whether there will be more government coronavirus relief assistance and when – beyond the mostly already spent $3 trillion approved months ago – is also unclear.
In the last days before next Tuesday’s elections, Trump and fractious Republican and Democratic lawmakers failed to reach an agreement on a new aid package – either the size of it or exactly who might benefit from it.
There is broad agreement to send a second round of $1,200 checks to most adult Americans and to reinstitute heightened national unemployment benefits on top of less generous state assistance. But the size of the new federal jobless aid and how long it would last have not been settled, nor the scope of more aid for financially troubled businesses and state and local governments.
Congress, in a lame-duck legislative session after the Tuesday elections, could act then on the coronavirus relief package, or wait until after either Trump or Biden is sworn in for a new presidential term on January 20.
The Labor Department reported Thursday that 751,000 jobless workers filed new claims for unemployment compensation last week, down 40,000 from the week before, and the second straight week the figure has fallen below 800,000.
The agency said 7.7 million workers remain unemployed, but the jobless rate had fallen to 5.3%, an extended improvement from the high point of 14.7% in April.
The recent weekly claims figures are well below the 6.9 million record number of claims filed in late March as the coronavirus swept into the United States but remain above the highest pre-pandemic level in records going back to the 1960s.
U.S. employers have called back millions of workers who were laid off during business shutdowns earlier this year, yet some hard-hit businesses have been slow to ramp up their operations again or have closed permanently. This has left workers idled or searching for new employment as coronavirus cases are surging again.
In addition, such major corporations as AT&T, Warner Media, Walt Disney, and Allstate, along with several airlines, have announced major layoffs in recent weeks as the U.S. economy works to regain its footing.