The U.S. economy grew at the fastest pace ever recorded in the third quarter, expanding at an annualized pace of 33.1 percent, the U.S. Commerce Department said Thursday.
The economic rebound means the U.S. recovered significant ground following the record-breaking collapse of output due to lockdowns intended to stem the spread of the coronavirus. Despite the third-quarter gains, the economy is still 3.5 percent smaller than it was as the year began.
Economists had expected the economy to grow 30.9 percent, according to Econoday. Some economists, however, had been expecting a bigger expansion following the release this week of positive data in recent news on durable good data and international trade. The Atlanta Fed’s GDPNow had third-quarter growth at 37 percent.
The third-quarter GDP gain was fueled by a record 40.7 percent increase in consumer spending. Business investment surged 20.3 percent during the quarter, reflecting a 70.1 percent jump in investment in equipment. The housing market is booming: residential investment grew at a rate of 59.3 percent.
The standard formula for calculating GDP in the U.S. annualizes the quarterly changes, which can exaggerate the changes. Absent annualization, the economy grew at 7.4 percent in the third quarter, by far the largest quarterly gain in records that began just after World War II. The previous record was 1950’s 16.7 percent rate of growth, a 3.9 percent quarterly gain.
The third-quarter growth follows a 31.4 percent decline in the second quarter, a 9 percent contraction on a quarterly basis, and a five percent annualized (1.3 percent non-annualized) contraction in the first quarter.
The economy is still expanding, albeit at a slower pace. Economists expect the economy will grow in the fourth quarter but still register a contraction for the full-year.
–The Associated Press contributed to this report.