The U.S. economy’s record third-quarter surge has already given way to a more moderate pace of growth, with a fresh jump in coronavirus infections and an extended deadlock over further stimulus threatening to weigh on activity.
Economists mostly projected fourth-quarter growth at an annual pace slightly below 3% to about 6% following Thursday’s report, which showed gross domestic product jumped 33.1% in the July-September period. That figure largely reflected a rebound in economic activity after widespread lockdowns earlier this year.
Analysts are betting the economy will continue to grow, amid solid gains in consumer spending, strong housing demand and businesses restocking inventories. Risks are rising, though, that the pickup in Covid-19’s spread to record speed will hit businesses and jobs through renewed distancing and shutdowns, as it already has in Germany and France.
“There looks like there’s still a fair amount of momentum,” said Jay Bryson, chief economist at Wells Fargo & Co. “But there’s a lot of risk right now -- downside risk generally -- as it relates to the re-acceleration of Covid.”
Even with the outsize gain, GDP is 3.5% below its prior peak, compared to a 4% shortfall in 2009 during the depths of the last recession. The economy is forecast to stay smaller than its pre-crisis size for several quarters or longer, and sectors such as travel, restaurants and health care remain below typical levels.
Other reports Thursday highlighted improvement in a job market that’s still far from normal, and a possible leveling-off in the red-hot housing market.
