After reporting a record contraction in U.S. economic activity in the previous quarter, the Commerce Department released a report on Thursday showing the economy rebounded by more than expected in the third quarter.
The Commerce Department said real gross domestic product skyrocketed by 33.1 percent in the third quarter after plunging by 31.4 percent in the second quarter. Economists had expected GDP to soar by 31.0 percent.
The substantial rebound in GDP came as consumer spending bounced back sharply, spiking by 40.7 percent in the third quarter after plummeting by 33.2 percent in the second quarter.
Increases in private inventory investment, exports, non-residential fixed investment, and residential fixed investment also contributed to the rebound.
The positive contributions to GDP were partly offset by decreases in federal government spending and state and local government spending as well as an increase in imports, which are a subtraction in the calculation of GDP.
“Overall, the initial recovery in GDP after the first wave of lockdowns were lifted was stronger than we originally anticipated,” said Paul Ashworth, Chief U.S. Economist at Capital Economics.
He added, “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.”
On the inflation front, the report said core consumer prices, which exclude food and energy prices, jumped by 3.5 percent in the third quarter following a 0.8 percent drop in the second quarter.
The material has been provided by InstaForex Company – www.instaforex.com