U.S. economy posts record third-quarter GDP rebound

Buoyed by a surge in business and residential investment along with stronger consumer activity, the U.S. economy grew at a record pace during the third quarter as it continues to recover from the coronavirus pandemic.

The gain represents a recovery of about two-thirds of the ground the American economy lost in the earlier stages of the pandemic.

GDP increased by an annualized rate of 33.1 per cent during the third quarter, the U.S. Commerce Department reported, compared to the second quarter’s annualized rate of 31.4 per cent contraction.

The gain was better than the 32 per cent estimate from economists surveyed by Dow Jones. The previous post-World War II record was an improvement of 16.7 per cent in the first quarter of 1950.

Increased consumption along with gains in business and residential investment as well as exports fueled the third-quarter rebound, the Commerce Department said. Decreases in government spending following the expiration of the Coronavirus Aid, Relief, and Economic Security (CARES) Act rescue funding subtracted from GDP.

The third-quarter growth came amid a resurgence in consumer activity, which accounts for almost 70 per cent of GDP. Personal consumption increased 40.7 per cent, Commerce Department figures show, while gross private domestic investment surged 83 per cent amid a 59.3 per cent increase on the residential side.