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The US economy grew rapidly in the summer, but recovery is slowing

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US Economy
The economy has reopened, but a full recovery is still out of reach, especially in cities such as New York. Photo: GETTY IMAGES

This spring, the US economy rose rapidly from the depths of the crisis triggered by the coronavirus lockdown. But a full recovery is still far away.

Official data show that in the three months ending September 30. The economy fell sharply from the previous quarter, setting a record high of 7.4%.

But production is still 2.9% lower than the same period last year.

When the data has released, analysts warned that the rebound may no longer exist.

Paul Ashworth, chief U.S. economist at Capital Economics, said:

“Overall, the initial recovery in GDP after the first wave of lockdowns were lifted was stronger than we originally anticipated.

Said Paul Ashworth, chief US economist at Capital Economics.

“But, with coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower.”

This spring, when countries around the world fell into blockade, the United States was not hit as severely as many places. The economy shrank by 9% in the second quarter. Meanwhile, the UK shrank by about 20%, France fell by 13.8%, and Germany fell by 9.7%.

The initial downturn in the United States has been partially offset by growth between June and September. As businesses reopened and employers recalled workers and shoppers to return to restaurants and stores-with trillions of dollars in government help.

US economic growth since 1950 chart

Assuming that the United States’ economic growth rate will continue for 12 months, then the United States’ annual economic growth pattern will grow at a rate of 33%, and the second quarter will be a record 31% contraction.

However, after the initial surge in activity, job growth slowed. Employers have yet to recover the more than 10 million jobs that were lost in the spring.

Stimulus stalemate

The unemployment rate last month was 7.9%, lower than the 14.7% in April, but still more than double the unemployment rate in February.

In recent weeks, major companies including aircraft manufacturer Boeing, financial company Charles Schwab (Charles Schwab) and media giant Walt Disney (Walt Disney) announced new layoffs. Oil giant Exxon said on Thursday that it is laying off 1,900 American jobs.

A person walks by a going out of business sign displayed outside a retail store in New York City

Photo: GETTY IMAGES

The US Department of Labor separately stated that more than 750,000 people applied for unemployment benefits last week. More than 22 million people continued to receive some form of unemployment benefits.

Brian Coulton, Fitch’s chief economist, said:

“As we move beyond the confinement and re-opening dynamics that drove violent swings in activity between March and September, the sober realities of the economic situation will become more apparent.”

“Growth is set to slow sharply, we are still a long way from normalisation and the surge in the virus cases means social distancing and all its related economic implications are here to stay.”

Electoral politics

Gross domestic product (GDP) data is the broadest measure of economic activity, less than a week away from the US presidential election. Washington’s debate on whether to fund additional coronaviruses in Washington is still at a deadlock.

Republicans pointed out that the recovery is faster than expected. That is a sign that limited aid is suitable for economic recovery.

On Twitter, U.S. President Donald Trump celebrated this growth. He saying that third-quarter earnings were “the largest and best in our country’s history, and it’s not even over yet”.

“Next year will be FANTASTIC!!!” he added, while warning that challenger Joe Biden’s victory next week would “kill it all.”

But Democrats called for an additional $300 billion in additional spending. They saying that the Republican Party’s resistance to such a huge rescue package would hurt the economic rebound.

Senator Chuck Schumer of New York, the Democratic leader of the Senate, said on Thursday:

“Our nation still has a long way to go before we overcome this public health crisis and our economy fully recovers.”

“Much more needs to be done.”

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