The Commerce Department on Thursday released its third-quarter GDP report, and in a victory for President Trump, it illustrates a record-setting, headline-getting 33.1% annualized and seasonally adjusted growth rate between July and September, suggesting that the U.S. economy is recovering from the beating it took by the coronavirus pandemic this spring.
The report, which follows the second quarter’s worst GDP drop in history, exceeded the 32% growth rate expectation in a Dow Jones survey as lockdowns lifted and stores and restaurants reopened. Consumer activity accounted for 68% of the GDP, which was, however, lessened by decreased government spending after the expiration of CARES Act funding.
But while the report offers roundhouse numbers and a punchy stump point for the Trump campaign, economists say it may not be as swell as it seems.
To their point, it’s worth remembering that GDP growth is annualized, meaning it assumes the growth rate from a quarter will last for the full year—but given the uncertainty surrounding the pandemic and its trajectory, some say the actual quarterly GDP could be a more accurate indicator. That GDP grew 7.4%, which bodes well, but is a starting point and not a finish line. More troubling are the signs of a pandemic resurgence as cases rise globally and shopping and dining activity declines, which could quickly reverse our GDP’s course.
Furthermore, the GDP was at such a low base after the second quarter’s nearly one-third drop, that even with the record growth it’s still 3.5% below its 2019 level.
On that note, the Trump administration’s GDP performance over the past years has not escaped notice. Even with the record growth, economist Steven Rattner observed on Twitter, Trump’s GDP over all four years of his first term is still worse than that of his predecessors. In terms of annualized change in real GDP growth, compared to every president since Dwight D. Eisenhower in the 1950s, Trump falls dead last—even with a consensus gain of 4% in the fourth quarter:
So where does today’s GDP report put Trump’s performance relative to his predecessors? Through Q3, dead last at +1.0%. Assuming a consensus gain of 4% in Q4, still dead last. pic.twitter.com/pgp1LqGdI4
— Steven Rattner (@SteveRattner) October 29, 2020