The US economy grew at an unprecedented pace in the third quarter, with the government’s support of more than $ 3 trillion, fueling consumer spending since the Covid19 outbreak began. But deep wounds from the COVID-19 recession can take a year or more to heal.
The Department of Commerce said in preliminary data released on Thursday that the gross domestic product in the world’s largest economy has increased by 33.1% on an annual basis in the last third quarter. This is the biggest growth since the government started keeping records in 1947.
One of the last big economic data to precede next week’s presidential elections, the GDP report is not enough to mitigate the human and economic tragedy caused by the coronavirus epidemic, with tens of millions of Americans still unemployed and more than 222,000 dead.
Five days before election day, President Donald Trump, still behind rival Joe Biden in most national opinion polls, considered the dramatic recovery in GDP as a sign of improvement. US production is below its level in the fourth quarter of 2019.
“GDP number just announced. Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!! However, Sleepy Joe Biden and his proposed record-setting tax increase would kill it all. So glad this great GDP number came out before November 3rd,” Trump tweeted.
Economists surveyed by Reuters predicted that the US economy will grow by 31% in the July-September quarter. The economy went into recession in February.
The government’s bailout has served as a lifesaver for many businesses and the unemployed, increasing consumer spending, which in itself reinforced the surge in GDP. But the government’s financial aid has been exhausted because the Trump administration and the Democrats of Congress did not agree. New COVID-19 cases cause restrictions for businesses such as restaurants and bars across the country.
Just over half of the 22.2 million jobs lost during the pandemic were recouped, but layoffs continue.
US unemployment claims
The number of Americans filing claims for unemployment insurance for the first time fell to the lowest level since the pandemic began last week. This shows that despite the increase in coronavirus infections, layoffs are decreasing.
The US Department of Labor said Thursday that initial jobless claims, a reflection of layoffs, fell by 40,000 in the week through October 24 to 751,000. This is the lowest figure since mid-March data before the epidemic ended many business operations across the US.
Daily virus infections reached new heights last week. It is too early to say how employers and consumers will react.
Unemployment claims remain extremely high by historical standards. In total, more than 20 million Americans still receive unemployment benefits through regular state and emergency programs.
The European Central Bank did not change its current policy at Thursday’s monetary policy meeting, resisting further stimulus pressure amid a new wave of epidemics, but gave the clearest hint of plans for a little more relaxation at its next meeting in December.
The European Central Bank’s board of directors kept the euro zone’s interest rate at 0% and the deposit rate at -0.5% on Thursday.
The central bank left the non-urgent asset purchase program of 20 billion euros per month and the epidemic bond-buying program of 1.35 trillion euros unchanged.
With the second wave of coronavirus infections threatening to turn Europe upside down before winter, the biggest economies of the bloc, Germany and France, announced new restrictions this week. Among the 19 countries using the euro, the measures are a blow to the recovery process, with others closing most of their service sectors.
The ECB warned that the epidemic poses risks to economic growth, and said it will reassess whether further support is needed at its December 10 meeting when new predictions emerge.
In a statement the ECB gave a clear hint that they could act in December:
“On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favorable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path,” the bank said.
But the ECB, having used the toolkit in an unprecedented policy back in spring does not appear to be in a hurry to take action, although it remains committed to providing more stimulus if needed.
At its annual plenary meeting, China’s ruling Communist Party announced its policy of “Taiwan’s reunification with the mainland and peaceful development across the straits.”
The Central Committee, the largest of the Communist Party’s elite decision-making bodies, convened on October 26–29, said Xinhua, the communist regime’s news agency. The party also said that Hong Kong and Macau would maintain long-term prosperity and stability.
China views anti-communist Taiwan as a renegade province to be taken under its control, by force if necessary.