Revised US Report Says Economy Grew 33.4 Pct In Third Quarter

An update to the U.S. government’s economic report boosted its earlier estimates of growth up by a bit. The economy, as measured by gross domestic product (GDP), grew by about one-third in the third quarter of 2020.

The Bureau of Economic Analysis reported Tuesday (Dec. 22) that GDP increased at an annualized rate of 33.4 percent in the third quarter, according to the bureau’s “third” estimate. The agency’s earlier estimate was that GDP had gone up 33.1 percent annualized rate.

This growth followed the epic second-quarter collapse of the economy. That was when the pandemic hit the U.S. and COVID-19 lockdowns limited most types of businesses — triggering massive unemployment.

The agency said that “upward revision primarily reflected larger increases in personal consumption expenditures.” Also there were increases due to “private inventory investment, exports, nonresidential fixed investment, and residential fixed investment.”

The boost in spending by individuals, the agency said, “reflected increases in services (led by health care as well as food services and accommodations) and goods (led by clothing and footwear as well as motor vehicles and parts).” In addition: “the increase in private inventory investment primarily reflected an increase in retail trade (led by motor vehicle dealers).”

However, these increases “were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans) and state and local government spending.”

In addition, the agency said, “imports, which are a subtraction in the calculation of GDP, increased.”

The U.S. economy faces big headwinds going forward into the new year. COVID-19 cases have surged around the country. Travel restrictions and rules of various kinds have been imposed by the states. Many U.S. businesses could see current restrictions tighten further.

One bright spot: Congress has approved a new stimulus deal worth $900 billion. The package includes mailing out individual stimulus checks for up to $600 that could arrive as soon as next week.

The bill also includes a $300-a-week boost in supplemental unemployment payments and extends the expanded eligibility rules for unemployment benefits.

The stimulus plan is a long-awaited follow-up to the $2.2 trillion CARES Act economic package the United States put together during the early days of the pandemic in March.