Blowout US GDP report to obscure troubling slowdown

30 October, 2020 12:00 AM printer

WASHINGTON:  After the worst downturn on record, the US economy is expected to post jaw-dropping growth of between 30 and 35 percent in the third quarter, but the headline number will obscure potential signs of trouble.

With days before the November 3 election, President Donald Trump will almost certainly seize on the data to be released Thursday by the Commerce Department as proof the recovery he promised from the Covid-19 pandemic is underway, reports AFP.

But economists warn that the rebound in the July-September period, after the 31.4 percent drop in the second quarter, was driven by consumer spending supported by a massive $3 trillion in government aid, much of which has since expired.

And even that bounce is not nearly strong enough to repair the damage and get the world's largest economy back to where it was pre-pandemic, or where it would have been if the expansion had continued at the same pace. The gain is "not enough to get out of (the) hole," Diane Swonk of Grant Thornton told AFP, and the prospects for the fourth quarter are "deteriorating by the day, without life boats."

With millions of workers still jobless and coronavirus cases spiking, raising fears of renewed lockdowns in the United States as there have been in Europe, Washington policymakers have failed to agree on a new rescue package to help households and businesses weather the crisis. David Wilcox, former director of the Federal Reserve's domestic economics division.