U.S. Economy Grew at the Fastest Pace Ever in the Third Quarter
New York, N.Y. (PPD) — The Bureau of Economic Analysis (BEA) reported the “advance” estimate for third quarter (Q3) gross domestic product (GDP) soared 33.1% on an annualized basis, a historic rebound that beat forecasts. Due to mitigation efforts to slow the spread of coronavirus (COVID-19), real GDP fell -32.4% in Q2 2020.
Forecasts ranged from a low of 20.0% to a high of 36.0%. The consensus forecast was 30.9%.
“The increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19,” the BEA stated. “The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.”
In large part, personal consumption expenditures (PCE) drove the increase, skyrocketing by a historic 40.7% in Q2 after falling -33.2% in the prior quarter. Forecasts for PCE ranged from a low of 30.3% to a high of 39.2%. The consensus forecast was 38.9%.
Private inventory investment, exports, nonresidential fixed investment, and residential fixed investment also helped to partly offset declines in federal government spending — reflecting fewer fees paid to administer the Paycheck Protection Program loans — and state and local government spending.
Personal saving came in at $2.78 trillion in Q3, down from an inflated $4.71 trillion in Q2. The personal saving rate — personal saving as a percentage of disposable personal income — fell to 15.8% in the Q3, down from 25.7% in Q2.