US GDP Quick Analysis: No V-shaped recovery despite 33.1% leap, covid looms over markets
Premium|Take advantage of 60% OFF on your first month.
Grab this special offer, it's 7 months for FREE deal! And access ALL our articles and analysis.
You have reached your limit of 5 free articles for this month.
BLACK FRIDAY SALE! 60% OFF!
Grab this special offer, it's 7 months for FREE deal! And access ALL our articles and analysis.
CLAIM OFFER- The US economy leaped by an annualized rate of 33.1% in the third quarter of 2020.
- The output is roughly 3% below pre-pandemic levels.
- Investors are worried about the impact of coronavirus in the fourth quarter.
The best quarter in history – following the worst one. Gross Domestic Product jumped by an annualized rate of 33.1%, above expectations. That included a surge of 40.7% in personal consumption, a core component of the economy. Business spending is up over 23% after crashing 27%.
The impressive statistics come after the crash. The US economy crashed by 31.4% annualized in the second quarter, a result of the covid-related lockdowns. It came on top of a 5% stumble in the first three months of the year, when the disease was only beginning to lift its head.
In quarterly terms, the world's largest economy fell by -10.1% in the first half of the year and now rose by 7.4%. That means that there is still some 3% to reach pre-pandemic levels – and more to reach the levels of activity had the economy continued growing at its moderate 2-2.5% pace.
The chart below provides a graphic representation of the situation:
Moreover, markets have moved on from the three months that ended in September to October and the colder months ahead. European countries are entering new forms of lockdowns as COVID-19 cases rage and figures are rising also in the US. Worries about a second American wave are already hurting markets and they may continue.
Things are moving fast in the coronavirus era, making even the quickly-released first release of GDP a lagging indicator.
Overall, the best quarter in history gives few reasons to be cheerful.
The data is released just five days ahead of the all-important US elections. President Donald Trump will likely tout the outstanding figure, despite the fact that it only represents a rebound from a crash – and not a V-shaped recovery. Will it impact voters? Around 75 million Americans – 55.5% of the total vote count in 2016, so there is less room for impact.
More: How three US election outcomes (and a contested result) could rock the dollar
- The US economy leaped by an annualized rate of 33.1% in the third quarter of 2020.
- The output is roughly 3% below pre-pandemic levels.
- Investors are worried about the impact of coronavirus in the fourth quarter.
The best quarter in history – following the worst one. Gross Domestic Product jumped by an annualized rate of 33.1%, above expectations. That included a surge of 40.7% in personal consumption, a core component of the economy. Business spending is up over 23% after crashing 27%.
The impressive statistics come after the crash. The US economy crashed by 31.4% annualized in the second quarter, a result of the covid-related lockdowns. It came on top of a 5% stumble in the first three months of the year, when the disease was only beginning to lift its head.
In quarterly terms, the world's largest economy fell by -10.1% in the first half of the year and now rose by 7.4%. That means that there is still some 3% to reach pre-pandemic levels – and more to reach the levels of activity had the economy continued growing at its moderate 2-2.5% pace.
The chart below provides a graphic representation of the situation:
Moreover, markets have moved on from the three months that ended in September to October and the colder months ahead. European countries are entering new forms of lockdowns as COVID-19 cases rage and figures are rising also in the US. Worries about a second American wave are already hurting markets and they may continue.
Things are moving fast in the coronavirus era, making even the quickly-released first release of GDP a lagging indicator.
Overall, the best quarter in history gives few reasons to be cheerful.
The data is released just five days ahead of the all-important US elections. President Donald Trump will likely tout the outstanding figure, despite the fact that it only represents a rebound from a crash – and not a V-shaped recovery. Will it impact voters? Around 75 million Americans – 55.5% of the total vote count in 2016, so there is less room for impact.
More: How three US election outcomes (and a contested result) could rock the dollar
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.