The US economy bounced back in the summer months to report a growth rate in the GDP of 33.1% between July and September. The figures were warmly received as it gave the first glimpse of hope that the US was starting to recover after the effects brought about by spring’s Covid-19 lockdowns. However, there are still cautious notes that full recovery is still a long way off.
This is because the nation’s unemployment rate is currently at 7.9%. This is twice as high as the figure that was reported in February. There was also a note of pessimism due to the fact that output was reported to be 2.9% lower than this time last year. All of which has suggested that the recovery could require extra stimulus if it is to avoid collapse under fears of a ‘second wave’ of the pandemic.
The figures will be interpreted differently by both political parties ahead of Tuesday’s presidential election. Donald Trump will be highlighting how the GDP’s rise of 7.4% from the previous quarter will show how he has controlled the effects of the crisis. This is especially so as the previous record quarterly increase was a modest 3.9% that was recorded in 1950.
However Joe Biden will be quick to seize upon the more unsettling aspects of the report that was published by the Bureau of Economic Analysis. The country’s economy has faced a tough challenge in dealing with a massive amount of business loans and extra unemployment payments. It remains to be seen what figures will be published for the fourth quarter of 2020 when these loans and payments will have been phased out.
Wave of redundancies continues
There has been trillions of government aid pumped into the economy in a bid to help businesses reopen. This has helped unemployment rates come back down to 7.9% last month from a high of 14.7% in April. But it is thought that there are still 10 million positions that have been lost since the wave of job cuts last spring.
Rather than bouncing back, there have been numerous major redundancies reported at leading US firms. These have included heavyweight brands like Walt Disney, Boeing and Charles Schwab. Just last week another 751,000 people filed for unemployment.
Such radical swings in figures aren’t expected to continue. Few economists are expecting the US economy to either grow or contract as much as it has done over the previous six months. But the prevailing mood is that the nation’s economy will end the year smaller than it began.
The question remains over what kinds of additional relief may be required to continue the recovery from the pandemic. Current debate in Washington appears to have stalled, but the decision to reopen the economy is thought to be behind the relatively positive economic figures. Consumer spending has been a critical factor in the rise in GDP. But what such figures mean for the millions of lives of American whose lives have been shattered by the effects of Covid-19 remains to be seen.