Just one quarter after record economic losses associated with the coronavirus, the American economy reversed and grew at a record pace. The annualized growth of 33.1% nearly reversed the loss of GDP from the prior quarter.
Although the crisis resulting from the government-designed economic slowdown had largely ended by May, the effect of the recovery is only now properly reflected in the third quarter numbers published by the Bureau of Economic Analysis with less than a week to go until Election Day. Such a pronounced recovery, and one that beat expert expectations, revives President Trump’s finest selling point as he heads to a grueling reelection: the economy.
At an annualized rate of 33.1%, third-quarter economic growth beat the current post-war record of 16.7% in 1950. In concrete terms, after the economy shrank by 9% from the first to second quarters, it grew by 7.4% from the second to the third. This is largely due to a reversal in personal consumption habits, not thanks to a change in demand, but because of the easing of government lockdowns and the gradual slackening of panic. After a Q2 plummet in consumption forced by onerous lockdowns, significant Q2 saving likely allowed the sharp increase in Q3 personal expenditures.
If there is any lifeline capable of salvaging Trump’s reelection odds, this is it. The BEA report, demonstrating a record revival in spending on both goods and services as well as investment, defies months of polling spelling a crisis in consumer confidence and fear of reopening the economy. It effectively confirms Trump’s hypothesis that Americans want to re-open the economy and return to some semblance of normalcy, Nore importantly, it proves that the president who presided over the finest economy in a generation is capable of restoring it again.
At the height of the coronavirus recession in April, the unemployment rate hit a record 14.7%. As of last month, it had plummeted to 7.9%, almost exactly where it was when Barack Obama won reelection in 2012. Of the 22.1 million jobs lost during the coronavirus recession, more than half have now been restored. Between our economic growth and job recovery, it’s clear that something in our re-opening strategy is sticking. This growth, in contrast to the party and the candidate threatening endless shutdowns, may present Trump with a much more compelling closing case in the election season than Hunter Biden’s emails.
