U.S. Economy Recovered Significant Ground in Record Third-Quarter GDP Rebound

The economy grew at a record pace in the third quarter—increasing 7.4% over the prior quarter and at a 33.1% annual rate—recovering about two-thirds of the ground it lost earlier in the coronavirus pandemic.

Gross domestic product—the value of all goods and services produced across the economy—jumped following a record decline from earlier in the pandemic when the virus and related shutdowns disrupted business activity across the country. That puts the economy about 3.5% smaller than at the end of last year, adjusted for inflation and seasonal fluctuations.

The third-quarter increase followed a 9% quarter-to-quarter decline in the second quarter, or a 31.4% annualized drop.

Forecasters expect the economy to expand through the fourth quarter, though more slowly, amid a pandemic still disrupting lives and commerce as the virus infects tens of thousands of people a day. Analysts project the economy will end 2020 smaller than a year earlier, but grow in 2021.

The Commerce Department’s GDP report provides the last major quantitative snapshot of the economy before Tuesday’s presidential election. Both President Trump and Democratic presidential nominee Joe Biden have promised to create millions of jobs and further heal the economy.

“This is the quarter that captures the reopening of the economy,” said Tim Quinlan, an economist at Wells Fargo Securities, adding that “it’s a far cry from signaling the all-clear that the economy’s in great shape here.”