(CN) — The U.S. economy grew by a record 33.1% annual rate in the third quarter, but there is still a long way to go before it is fully healed from the damage inflicted by the coronavirus pandemic.
A Commerce Department report released Thursday – just five days before a presidential election in which an economy-crushing pandemic is at the top of most voters’ minds – shows a gain from July to September nearly equal to the massive plunge in gross domestic product in the second quarter.
The government reports quarterly GDP changes at annualized rate, meaning actual quarterly growth numbers are compounded four times. This has the effect of making short-term surges or drops look larger than they actually are.
Economists say the real third quarter growth is 7.4%, and the U.S. has only recovered about two-thirds of its output after the pandemic closed businesses and put millions of Americans out of work.
“The 33.1% annualized rebound in GDP in the third quarter was unprecedented in size, but still left the economy 3.5% smaller than it was in the final quarter of last year,” said Paul Ashworth, chief U.S. economist at Capital Economics.
The third quarter rebound in GDP, which measures the United States’ total output of goods and services, was driven by a boost in consumer spending and business investment.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose by a record 40.7% annual rate last quarter after dropping by a record 31.4% in the second quarter. Business investments grew by a 20.3% annual rate in the third quarter.
On the campaign trail, the GDP report was viewed in two very different ways.
President Donald Trump praised the news as proof of a robust recovery, claiming his Democratic opponent Joe Biden would halt progress with tax increases.
“GDP number just announced. Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!!” he tweeted.
Biden, meanwhile, was quick to point out that poverty is on the rise and Trump could be the first president since Herbert Hoover to leave office with fewer jobs than when he started.
“Success in a Biden-Harris Administration will not be measured just by the stock market or GDP growth, but by the extent to which growth is raising the pay, dignity, and economic security of our working families—especially those who have been left behind,” Biden tweeted.
Further adding to economic worries, Democrats and Republicans have failed to reach a deal on a new stimulus package. Last month, economists at Goldman Sachs revised their fourth quarter GDP growth estimate down from 6% to 3% based on the lack of federal aid.
The Labor Department also reported Thursday that 751,000 Americans applied for unemployment last week, the lowest level since March but still historically high. The economy is still down about 10 million jobs compared to pre-pandemic levels.
More than 227,000 Americans have died from Covid-19, the respiratory disease caused by the new coronavirus.