By Richard Branch, Chief Economist
As widely expected, U.S. Gross Domestic Product shot higher in the third quarter, increasing at an annualized 33.1% — the largest quarterly increase in GDP since 1947 when quarterly figures were first tracked. The increase follows a sharp 31.4% contraction in economic output during the second quarter and a 5.0% drop in the first quarter.
Third quarter gains were widespread. Consumer spending was robust, with large increases for both goods and services as pandemic restrictions were lifted. Business investment also moved significantly higher driven by spending on equipment, while investment in nonresidential structures posted a notable decline — its third consecutive quarterly drop. Residential investment also moved higher in the quarter. On the downside, government spending contracted, driven by weaker spending at both the federal and state and local levels.
The third quarter bounce back reflects the initial round of businesses reopening and rehiring as pandemic restrictions were lifted over the summer. It does not, however, mean that the economy has returned to pre-pandemic levels of activity and regained its full health. With today’s report, the economy has recovered only two-thirds of the output lost in the first half of the year. Moving forward, the economy still faces significant hurdles including the next wave of COVID-19, election uncertainty, and diminished hope in the near-term for additional federal stimulus. Expect economic growth to move sideways in the fourth quarter and into early next year.
: Dodge Data & Analytics is North America’s leading provider of commercial construction project data, market forecasting & analytics services and workflow integration solutions for the construction industry. Building product manufacturers, architects, engineers, contractors, and service providers leverage Dodge to identify and pursue unseen growth opportunities that help them grow their business. On a local, regional or national level, Dodge empowers its customers to better understand their markets, uncover key relationships, size growth opportunities, and pursue specific sales opportunities with success. The company’s construction project information is the most comprehensive and verified in the industry. Dodge is leveraging its more than 125-year-old legacy of continuous innovation to help the industry meet the building challenges of the future. Learn more at www.somethingwhimsy.com.
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