In Q3, the GDP ‘fell asleep at the wheel.’
The Bureau of Economic Analysis recorded a 2.1 percent annual increase in gross domestic product in the third quarter, down from 6.7 percent in the second quarter and 6.3 percent in the first quarter, according to the US Department of Commerce. GDP growth is expected to be 2% in the third quarter, according to preliminary projections.
The report mentions the reintroduction of COVID-19 restrictions in areas of the country where cases are on the rise, while company loans, state subsidies, and household social benefits are being reduced or eliminated.
According to the Associated Press, economists forecast a positive fourth-quarter outcome if COVID-19 cases rise and inflationary implications are low.
Economists believe that the recent increase of COVID-19 cases, particularly the Delta form, will have little impact on consumer expenditure, which accounts for 70% of all economic activity.
“I believe each new wave of COVID cases will be less harmful to the economy because more people are getting vaccinated,” Mark Zandi, Moody’s Analytics’ top economist, told AP News.
“Q3 GDP fell asleep at the wheel,” according to Dan North, a senior economist at Euler Hermes North America, although evidence pointed to a robust fourth quarter.
“I’ve noticed an increase in high-frequency indicators like credit card spending, TSA throughput, OpenTable reservations, and hotel occupancy,” says the analyst.
“They all turned positive again in Q3 when the Delta variant peaked, which the GDP data corroborated, and they all took a fall in Q3 when the Delta variant peaked,” North stated in an email to IBT.
There are, however, several variables that could stymie the economy. Inflation, supply chain delays and shortages, increased COVID-19 cases, and workforce shortages due to high resignation rates may all have an impact on fourth-quarter estimates.