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The Great American Recovery: Third Quarter GDP Blows Past Expectations

Posted on Thursday, October 29, 2020
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by Outside Contributor
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american GDP recovery expectationsAfter releasing his plan to reopen America safely in April, President Trump remarked that prior to the Coronavirus pandemic, the United States had “built the greatest economy anywhere in the world . . .  and we’re going to build it again.”

At that time, the consensus among economic forecasters was that pandemic-induced lockdowns would result in a sharp economic contraction in the second quarter, and that the economy would experience tepid growth in the third quarter as it slowly clawed back pandemic losses. But because of the President’s pro-growth policies that set a strong pre-pandemic foundation—and the extraordinary speed and scale of the Administration’s support for America’s families and businesses—our nation’s recovery continues to exceed expectations.

This morning’s release of U.S. GDP for the third quarter of 2020 from the Bureau of Economic Analysis (BEA) affirms President Trump’s statement that “we’re coming back, and we’re coming back strong.”

The BEA estimates that real GDP grew 7.4 percent (33.1 percent at an annual rate) in the third quarter, the largest single quarter of economic growth on record and roughly twice the prior record of 3.9 percent (16.7 percent at an annual rate) set in the first quarter of 1950. This growth follows the most severe pandemic-induced contraction on record in the second quarter of 2020, which occurred as the government mandatorily shut down all but nonessential services, and Americans made sacrifices to slow the pandemic.

With the historic third-quarter growth, the United States in a single quarter has now recovered two-thirds of the economic output lost due to the pandemic during the first half of the year (Figure 1). In the recovery from the 2008-09 recession, it took 4 times as long to regain the same share of lost economic output.

After data confirmed the recovery was well underway beginning in May, the nonpartisan Congressional Budget Office (CBO) in July projected a second quarter contraction roughly in line with the actual decline that occurred, though the CBO projected a third quarter growth rate of just 4.0 percent (17.0 percent at an annual rate). The strong footing of the United States economy prior to the pandemic contributed to the stronger-than-expected recovery our country is currently experiencing.

The United States had the highest GDP growth rate among the G7 countries from 2017 to 2019, with growth more than double the G7 average. While the pandemic hit every major economy around the world, the United States experienced the least severe economic contraction of any major Western economy in the first half of 2020, with the Euro Area economy’s contraction being 1.5 times as severe as the contraction of the U.S. economy.

A resurgence in consumer spending, which accounts for two-thirds of GDP, supported the historic third quarter GDP growth and reflects both the reopening of America’s businesses and the confidence of consumers to spend on goods and services once more. Consumer spending in the services sector alone accounted for nearly half of GDP growth in the third quarter. Greater third quarter spending on recreation, food, and accommodation services—sectors acutely impacted by lockdowns—alone accounted for one-fifth of total GDP growth in the third quarter.

The growth in the third quarter, and the particular strength of American consumers, also reflects the swiftness and magnitude of the aid the Administration provided directly to America’s families, workers, and small businesses. The $2.7 trillion in stimulus that the CARES Act and other pandemic-related legislation supplied is roughly 13 percent as a share of GDP. That is more than twice the size of the 2009 American Recovery and Reinvestment Act (ARRA) as a share of GDP.

This direct aid supported Americans’ income through the pandemic. Total personal income rose above, and still remains above, pre-pandemic levels. Personal income excluding the government transfers provided for in the CARES Act, however, decreased from pre-pandemic levels (Figure 2). Without this income support, the resurgence in consumer spending would likely not have been as strong. Having added back 11.4 million jobs since April with more than 5 in 10 jobs lost in the pandemic recovered, total wages and salaries increased 5 percent in the third quarter and are now just 1.4 percent below pre-pandemic level.

 

The strong foundation of the pre-pandemic economy and the efficacy of the Trump Administration’s efforts to provide direct economic aid to families and small businesses helped deliver record-setting growth that few predicted would occur earlier this year. Our nation’s economy is poised for continued expansion in the fourth quarter, and the strength of the recovery thus far is a testament to the fortitude and resilience of America’s workers and families.

 

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GT Patr
GT Patr
3 years ago

Thank you AMAC Even Fox is ignoring this story.

GT Patr
GT Patr
3 years ago

I guess I never realized what a genius Obama was. LOL.

GT Patr
GT Patr
3 years ago

Gee. I’m the only guy on here ? Tonight Tucker Carlson had a great interview with Glen Greenwald of ” The Intercept” who stated
that the CIA immediately set out to discredit and destroy Trump. He referred to them as “CIA goons”. Trump has , among many
other accomplishments, shown the DC swamp as being a machine that will eliminate anyone who questions them. We don’t have
a republic. We are an early KGB ( russia: 1970s) state. My key concern is do we care ?

Shoe
Shoe
3 years ago

The quarterly GDP growth was amazing. It is a V shaped recovery BUT the mainstream media is presenting it in such a way that its listeners (the uninformed) think this was a negative event.The MSM is only comparing the economy to what we had before the Pandemic hit and implying that is “nothing news” ??

Stephen Russell
Stephen Russell
3 years ago

Then add to rebuild riot zones in cities Once & if riots end for jobs.

Coura
Coura
3 years ago

And the terrorist Barry Soetoro a.k.a. Barack Hussein Obama, wants to take credit for Trump’s Great Economy. What a cynical corrupt liar!

Linette Murray
Linette Murray
3 years ago

We are VERY happy to see that our President is carrying on his promises and policies to Make and Keep America Great!! This is excellent news and we are hoping, voting, talking up our President’s accomplishments past, present and future!

Myrna
Myrna
3 years ago

Americans will stand up for our country. I hope this is on November 3: and Nov. 3 will be the day if the citizens are awake. Preventing free speech should be noxious to these CEO’s who were called to the Senate hearing. If they don’t change course, they will represent people for whom the job is the paycheck (and no sense of right and wrong guides them). When Americans find out that black lives matter is the only group that still has freedom, they will stand up.

James
James
3 years ago

The news networks refuse to let their mushrooms (viewers) know anything favorable about Mr. Trump. It’s best to keep them in the dark. However, in this new age we have so many additional news sources. The original networks are now irrelevant. Viewers no longer have to listen to the news networks – now the enemy of the people!

GKP
GKP
3 years ago

My 5 wishes for the New Year// TRUMP is PRESIDENT/Senate is Republican controlled/House is Republican controlled/Major changes to the FBI/management/ and Pelosi is thrown out on her old old old ASS////////

Lori Oneal
Lori Oneal
3 years ago

I am so glad our economy is coming back. And now you see so many cases again right before the election. Now, I know it is real but so much of it is not reported and now the numbers are sky rocketing again in every state. I live in Washington state and we all know we need a new governor cause ours is a dictator,how can we stop this madness?

Garye
Garye
3 years ago

President Trump – More America First and Great with the economy!
Let’s go , a MASSIVE Red Wave to Save Our Country!

Paul W
Paul W
3 years ago

I guarantee that if beijing-biden was at the helm, that “V” graph recovery would look like a backslash . A heavily regulated, government bureaucracy controlled economy would’ve collapsed completely.

Vilas Gamble
Vilas Gamble
3 years ago

Here we are just a few days before the election and the mainstream polls are trying to tell us that the election is over. Joe Biden has such a large lead that there is no way President Trump can win so we might as well stay home. Don’t fall for it. If you have not voted yet, no matter what the odds seem to be, get to the pools on Tuesday and vote!

I have posted this before but am doing it again just as a reminder of what is at stake.

                      The Rise and Fall of Great Civilizations
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over a loss of fiscal responsibility, always followed by a dictatorship. The average of the world’s great civilizations before they decline has been 200 years. These nations have progressed in this sequence:
From bondage to spiritual faith,
From spiritual faith to great courage,
From courage to liberty,
From liberty to abundance,
From abundance to selfishness,
From selfishness to complacency,
From complacency to apathy,
From apathy to dependency,
From dependency back again to bondage.”
Republicans, do not let this happen to our great country by default. Talk about FREEDOM at every rally, every precinct meeting, every gathering you have the opportunity to compare the Republican Freedom Agenda to the Dems Socialist agenda. Keep America Free!! 

Remember, vote like your freedom is at stake, because it is!!!

Denise
Denise
3 years ago

God Bless America and President Trump!! Everybody vote straight red.

sherry
sherry
3 years ago

He’s my President and I already voted for 4 more years! Unfortunately I am one who lost my job back in May and have not been able to get another one. It’s still tough out there from what I am seeing.

Robin W Boyd
Robin W Boyd
3 years ago

It doesn’t matter if we are liberal or conservative minded, as long as we are flexible and rational and don’t stray to either extreme. Rational American citizens must vote for the man who has most benefitted American citizens of all ilk’s. Stay on course!

mjl
mjl
3 years ago

As I noted above, I have voted in person for Trump and my state’s conservative candidates…interesting have you heard about early voters asking if its possible to change their votes?? This early voting without hearing from Biden is the only way I feel Trump would lose to Biden, I’ve watched almost all of Trump’s rallies…have seen the huge crowds and the enthusiasm that only Trump creates…it would be a shame if with the belated exposed (on purposes?) corruption that has been proven even by Joe Biden that these earlier voters didn’t have a chance to consider before voting. One question why wouldn’t this proof make Biden ineligible to hold office plus IRS money laundering charges??

John A. Fallon
John A. Fallon
3 years ago

The great presidentual accomplishments that unfortunately nobody heard about, we need to VOTE and PRAY that GOD is on our side and helps us thru this MESS!

Mary S.
Mary S.
3 years ago

I believe Trump will win, but from what I’ve read, the Leftists have something in the wings for just such a case. They are prepared to turn the thugs loose with attacks being made on the Trump voters. There will be the usual angry destruction of property and even attacks on American voters for Trump, to the point they will resort to killing and the usual destruction of property. All this without the demoncrats disagreeing over their usual destruction and injuries……and probably killing of innocent people.
I just hope that when Trump wins, he will have the military and the National Guard on our streets to arrest the criminal demoncrats.

Carla H
Carla H
3 years ago

I hope this gets reported on ALL news channels so Americans can see the truth. Can anything be done about the media that is not the real news but puppets? Whatever happened the the Walter Cronkites of the world?

Bill Brown
Bill Brown
3 years ago

Outstanding news for all Americans!! Bad news for the DemocRats/Communists, News Media, and everyone who hates the United States of America!! We must be ready to FIGHT for OUR Country!! What is happening today is exactly why OUR Founders wrote and passed the 2nd Amendment!!  Join the Trump Movement – The American Revolution Version 2.0!!!  Become a Counter-Revolutionary!!!  Stand-up for Our Republic!!!!  Remove Every DemocRat!!!!!

Larry W
Larry W
3 years ago

SO, which do you want America, a bumbling, glassy eyed politician held up in his basement talking about a dark winter, OR An energetic, True American President who fights for America and American Families and American jobs??? JUST LOOK at what he has accomplished in 3 and a half years and he’s not a politician!!

Cyndi
Cyndi
3 years ago

Thank god President Trump is a business man because he was able to use his knowledge to put this country back on track to the black (financially). No one else could have done what did. Please keep this going President Trump. The future of this country is in the balance here.

Nita
Nita
3 years ago

Not fully understanding the GDP, is the housing market tied to it also? I know houses in Ohio are selling almost as soon as they hit the market. I hope this isn’t a false security that could collapse if people default on those loans.

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