US Q3 GDP rebounds by 33.1%

US gross domestic product bounced back in the third quarter from the collapse in activity witnessed over the preceding three months.

According to the Department of Commerce, GDP shot back at annualised pace of 33.1% (consensus: 32.0%) following the second quarter's 31.4% plunge.

Despite the record pace of expansion registered over the three months to September, GDP remained 3.5% below its end 2019 level, before the onset of the pandemic, Ian Shepherdson at Pantheon Macroeconomics pointed out.

In other words, to fully recoup the hit to US GDP over the first two quarters of 2020, it would need to have rebounded by 53.3% in the third quarter.

Pacing the rebound in activity was a 40.7% leap in consumption as fiscal policy kicked-in, led by a 82.2% surge in outlays for durable goods.

Spending on serviecs meanwhile was 38.4% higher, with that on healthcare increasing by the most.

Business investment on the other hand fell short of SHepherdson's forecast, increasing by 20.3%, although residential investment was 59.3% higher - its fastest clip since the third quarter of 2007.

Inventories and net foreign trade combined added 3.5 percentage points to the annualised rate of growth, also missing Shepherdson's forecast.

Looking ahead to the last three months of 2020, the economist said the outlook was unclear assuming no further fiscal stimulus, what with Covid-19 infections still spreading.

"Absent new stimulus, and with Covid infections spreading rapidly, we’re sticking to our 4% forecast for Q4 growth, though the margin of error here is large at this point."

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