WASHINGTON (NewsNation Now) — The U.S. economy grew at an unrivaled pace in the third quarter as the government poured out more than $3 trillion worth of pandemic relief which fueled consumer spending, but the deep scars from the COVID-19 recession could take a year or more to heal.
Gross domestic product rebounded at a 33.1% annualized rate last quarter, the Commerce Department said in its advance estimate on Thursday. That was the fastest pace since the government started keeping records in 1947 and followed a historic shrinkage rate of 31.4% in the second quarter.
Thursday’s estimate of GDP growth is the last major economic report before Election Day, after a campaign that President Donald Trump has sought to build around his economic record before the pandemic hit. Trump has drawn generally solid public support for his handling of the economy.
But the economy appears to be weakening again. Government funding has been depleted with no deal in sight for another round of relief. New COVID-19 cases are increasing across the country, forcing restrictions on businesses like restaurants and bars. Just over half of the 22.2 million jobs lost during the pandemic have been recouped, and layoffs persist.
“We have a pretty noxious brew developing with the pandemic intensifying, the lack of any further government stimulus and signs showing that the economy is already slowing pretty significantly,” said Mark Zandi, chief economist at Moody’s Analytics.
Zandi said he thinks GDP will regain pre-pandemic levels by spring of next year, with GDP expanding 4.2% for 2021. But he warned that the job market might not fully recover until perhaps 2023.
“Many of the jobs in retailing, leisure and airlines have been permanently lost,” he said, “and those folks will have to find different work, and that will take time.”
A separate report from the Labor Department on Thursday showed 751,000 people filed for state unemployment benefits in the week ending Oct. 24, compared to 791,000 in the previous period. Though claims have dropped from a record 6.867 million in March, they remain above their 665,000 peak seen during the 2007-09 Great Recession.