Amid the economic disruption of the global pandemic, the U.S. Gross Domestic Product (GDP) has done quite well. According to the Bureau of Economic Analysis (BEA), the U.S. GDP grew at an annual rate of 4.9 percent in the third quarter of 2020. This rate is a significant improvement from the initial quarter when the GDP dropped 31.4 percent during COVID-19 restrictions.
The U.S GDP’s growth is a sign of the economy’s gradual recovery from the pandemic and a testament to government stimulus measures that have supported businesses and industries affected by the coronavirus.
The better-than-expected 4.9 percent GDP growth rate in 3Q 2020 surpassed analysts’ predictions, who had projected growth of 4.3 percent. This solid economic rebound was largely driven by consumer spending, which contributed to over 60 percent of the GDP growth.
The Federal Reserve has predicted that America’s economic growth will continue through the rest of 2020, arguing that the virus must be contained during the winter months to bring about a full recovery. The Fed’s policies, such as pauses on business operations, keeping interest rates near zero, and providing financial support to individuals and small businesses have been instrumental in supporting economic activity during the pandemic.
Moreover, the passage of the CARES Act in March, which provided stimulus payments, expanded unemployment benefits, and loans to businesses, has been credited to helping maintain economic activity.
Uncertainty still remains as to how the pandemic will shape the economy in the near and long term, especially given the continuous rise in cases. However, for now, the strong GDP growth in the third quarter has come as a welcomed sign of economic stability and hope for a better 2021.
