The national shutdown in the spring due to the coronavirus pandemic devastated the American economy. In the second quarter of the year, GDP plunged a staggering 31%. That was an all-time record drop, dwarfing even the Great Depression.
However, there is finally some good news on the economic front. The GDP rebounded significantly in the third quarter, increasing by a whopping 33.1%.
It is amazing what happens when governors aren’t forcing businesses to shut down, isn’t it?
Of course, Nancy Pelosi and the Democrats are taking credit for the outstanding GDP numbers. They say the quarter growth is a result of the “stimulus” payments they paid out. Yeah, I am sure $1,200 per person really contributed to a record-setting quarter.
It’s really very simple: when the government lets businesses open, they hire workers and consumers have a place to spend their money. It isn’t because of government stimulus.
Pelosi and the Democrats don’t want to give President Trump credit because they know the economy is his strongest issue with voters, and they can’t let him have a win on this one.
Business Insider reported, “US gross domestic product grew at an annualized rate of 33.1% in the third quarter, the Commerce Department said on Thursday. The reading is the largest output gain on record, in data going back to the 1940s. It’s roughly double the next-biggest jump, in 1950. Economists surveyed by Bloomberg had expected a 32% gain.
The reading represents how much the economy would’ve grown had the third-quarter rate lasted for a year. It’s a sharp reversal from the second quarter’s 31.4% annualized rate of contraction.”
The labor market situation in the country is improving as well. Wall Street Journal reported, “Employers have been increasing their payrolls for months after severe staffing cuts in the spring. They shed 22.2 million jobs in March and April, during the worst of the shutdowns, and have added 11.4 million since then as restrictions eased…
Initial jobless claims, a proxy for layoffs, fell by 40,000 to 751,000 in the week through Oct. 24, the Labor Department said Thursday. That was the lowest level of claims since mid-March, just before the pandemic shut down much business activity throughout the U.S.”
Consumer spending is a tide that lifts all boats, as evidenced by the latest personal consumption numbers. Fox Business reported, “The third-quarter growth reported Thursday was spurred by a resurgence in consumer spending, which accounts for roughly two-thirds of the nation’s GDP, as states eased shutdown measures over the summer and employers rehired workers. Personal consumption increased by 40.7%, a record, last quarter. Business investment and housing also posted strong gains.”
There has been a lot of discussion about what kind of economic recovery there would be. Would it be a K- or V-shaped recovery? The early evidence clearly points to a V-shaped recovery, which is great news for American workers and consumers.
This couldn’t come at a better time for millions of Americans given the fact that bills are coming due and many Americans are endangered of being evicted due to late payments because of unemployment.
Hopefully, this trend continues. Millions of Americans’ livelihoods depend on it.