U.S. Economy Crawled At 2% Rate In 3rd Quarter

Hampered by rising COVID-19 cases and persistent supply shortages, the US economy slowed sharply to a 2% annual growth rate in the July-September period, the weakest quarterly expansion since the recovery from the pandemic recession began last year, Martin Crutsinger reported for the Associated Press (AP).

Photo Insert: Supply chain woes have bogged down the recovery of the world's largest economy - and that of the rest of the world.

Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product — its total output of goods and services — declined from robust growth rates of 6.7% in the second quarter and 6.3% in the first quarter, gains that had been fueled by vast infusions of federal rescue aid.

The 2% annual growth last quarter fell below expectations and would have been even weaker if not for an increase in restocking by businesses, which added whatever supplies they could obtain.

Such inventory rebuilding added 2.1 percentage points to the quarter’s modest expansion. By contrast, consumer spending, which fuels about 70% of overall economic activity, slowed to an annual growth rate of just 1.6% after having surged at a 12% rate in the previous quarter.

Economists remain hopeful for a bounce-back in the current October-December period, with confirmed COVID cases declining, vaccination rates rising and more Americans venturing out to spend money. Many economists think GDP will rebound at a solid annual growth rate of at least 4% this quarter.

“The key story right now is the improving health situation,” said Gregory Daco, chief US economist at Oxford Economics. “People are feeling a lot more at ease about moving about.”

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