The US economy grows 7.4% between July and September but doubts about the course of the pandemic cloud optimism
The United States economy grew at an unprecedented level in the third quarter, with an increase of 7.4% of GDP – equivalent to an annualized rate of 33.1% -, as announced by the Commerce Department on Thursday. The rise comes after huge losses in the second quarter, when GDP collapsed to an annualized and seasonally adjusted rate of 9%, the biggest drop since records began in 1947. US GDP remains 3.5% below the pre-crisis level. The growth data known just five days before the elections promises to start different political readings. Already this Tuesday, President Donald Trump had promised on Twitter “a great GDP”, thus reinforcing his image as a candidate more capable of managing the economy.
Although the specific data is positive, the United States economy is mired in the black hole of the pandemic, which ended the largest expansionary cycle in the history of the country and led it into recession. The analysts’ forecasts were fulfilled, as they pointed out that the growth figure would exceed 7%, more than double that of any quarterly growth rate since World War II. But the reality is that the economy continues to slow down, while the health crisis casts many more shadows than certainties on the pace of recovery, as demonstrated by the Wall Street crash on Wednesday for fear of the spiral of the pandemic and the lack of political agreement between the White House and Congress to carry out a new stimulus plan.
It is true that the US economy began to recover from the closure of activity derived from the lockdown in the summer months, but experts recall that production would continue to be more than 4% below the level at the end of 2019, which is more than lowest recorded at the previous peak of the Great Recession. That is why they warn that rapid growth in the third quarter does not imply that the economy is going through a strong phase, since this period measures the level of production from July to September compared to the average from April to June, and the level in April and May established a baseline so low that any increase, even minimal, would have served to generate good data. To regain its pre-pandemic growth level, GDP should grow even stronger, according to experts.
“The figure will be historical without a doubt, but, except for political propaganda, it will be completely devoid of meaning, because it will not tell us much about what awaits us,” the economist Joel Naroff abounded in statements to the agency France Presse this Wednesday. . The previous record for quarterly growth was 16.7% in the first of 1950,
Subjugated by the impact of the pandemic, the US economy, which fell into recession in the first half of the year, still needs mechanical ventilation, especially if data on contagion and hospitalizations for covid-19 worsen, uncontrolled in the Midwest of the country. Clear signs – for example, a halt in the sale of new homes since the summer – point to a slowdown in economic activity this quarter, and the very course of the disease does not allow ruling out the possibility of a second lockdown and a recession yet deeper.
At the end of March, the US government managed to carry out a rescue plan of 2.2 trillion dollars, the largest economic stimulus plan launched by a country in history. The program, called Cares (the acronym in English for Help, Relief and Economic Security against the coronavirus), included a game of 250,000 million in direct checks to citizens with salaries of up to 75,000 dollars. In April, another $ 484 billion (about 450 billion euros) was added to help hospitals and small and medium-sized businesses. In total, Washington has mobilized almost $ 3 trillion in aid to families and businesses, although the Cares plan’s aid ended in May, throwing eight million Americans into poverty, according to a study by Columbia University.
Subscribe here to newsletter about elections in the United States