Historic increase in U.S. GDP in third quarter revised to 33.4% annualized rate

Historic increase in U.S. GDP in third quarter revised to 33.4% annualized rate

The numbers: The record increase in the U.S. economy over the summer in the aftermath of the pandemic lockdown was revised slightly higher to a 33.4% annual pace, the Commerce Department said Tuesday.

The increase in gross domestic product, the official score card for the U.S. economy, was previously put at 33.1% during the three month period from July to September.

The rebound followed a record 31.4% decline in the April-June quarter

What happened: Consumer spending, the main engine of the economy, was revised slightly higher along with business fixed investments. These were partly offset by a downward revision to exports.

Big picture: After two quarters of distorted GDP data, the economy will return to a somewhat more normal growth rate in the fourth quarter. The economy seems to be slowing as the final quarter winds down. Economists are expecting growth at a 3.5% annual rate. The passage of the COVID aid package on Monday could bolster the outlook for the first quarter. Some economists had been worried about a double-dip recession.

But for 2020, the economy has proven more resilient than expected. The Federal Reserve recently revised up its 2020 GDP forecast to a decline of 2.4% from prior estimates of a 3.7% drop.

Market reaction: U.S. stock-index futures indicated a subdued start to trade on Tuesday. The Dow Jones Industrial Average

rose 37.40 points on Monday.

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