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U.S. economy notches record growth in 3rd quarter – CBC.ca

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The U.S. economy grew at an unrivalled pace in the third quarter as the government poured out more than $3 trillion US worth of pandemic relief that fuelled consumer spending, but the deep scars from the COVID-19 recession could take a year or more to heal.

Gross domestic product rebounded at a 33.1 per cent annualized rate last quarter, the Commerce Department said in its advance estimate on Thursday. That was the fastest pace since the government started keeping records in 1947 and followed a historic shrinkage rate of 31.4 per cent in the second quarter.

The GDP report — one of the last major economic scorecards before next week’s presidential election — will do little to mitigate the human tragedy inflicted by the coronavirus pandemic, with tens of millions Americans still unemployed and more than 222,000 dead.

With five days remaining to Election Day, President Donald Trump, trailing in most national opinion polls, will probably seize on the stunning rebound in GDP as a sign of recovery. But U.S. output remains below its level in the fourth quarter of 2019, a fact Trump’s Democratic challenger Joe Biden is almost certain to highlight along with signs that the growth spurt is fast petering out.

Economists polled by Reuters had forecast the economy expanding at a 31 per cent rate in the July-September quarter. The economy slipped into recession in February.

“We expect minimal growth in [the fourth quarter] as consumer and business anxiety can only increase amid rising virus infections,” BMO senior economist Sal Guatieri said in a commentary.

With no further U.S. government aid in sight this year, Goldman Sachs has slashed its growth forecast for the current fourth quarter to a three per cent annual rate from six per cent.

Unemployment benefits claims down

The government’s rescue package provided a lifeline for many businesses and the unemployed, juicing up consumer spending, which on its own powered the surge in GDP. But government funding has been depleted with no deal in sight for another round of relief. New COVID-19 cases are spiralling across the country, forcing restrictions on businesses like restaurants and bars.

Slightly more than half of the 22.2 million jobs lost during the pandemic have been recouped, and layoffs persist.

A separate report from the Labour Department on Thursday showed 751,000 people filed for state unemployment benefits in the week ending Oct. 24, compared to 791,000 in the previous period. Though claims have dropped from a record 6.867 million in March, they remain above their 665,000 peak seen during the 2007-09 recession.

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Statistics Canada says economy grew at a record pace in third quarter of 2020 – CP24 Toronto's Breaking News

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OTTAWA – Statistics Canada says the economy grew at a record annualized pace of 40.5 per cent in the third quarter as businesses came out of COVID-19 lockdowns.

The previous record for quarterly growth in real gross domestic product was 13.2 per cent in the first quarter 1965, the agency says.

As historic as the rebound was, it fell short of expectations.

Financial data firm Refinitiv says the average economist estimate was for an annualized growth rate of 47.6 per cent for the quarter.

The rebound over July, August and September was a sharp turnaround from the preceding three-month stretch which saw a record drop.

Driving the bounce-back were the further rolling back of public health restrictions that allowed businesses to reopen.

Statistics Canada also says there was a substantial increase in the housing market owing to low interest rates and household spending on goods like cars.

Despite the overall increase, the national statistics office says real gross domestic product still remains shy of where it was before the pandemic.

The third quarter ended with the fifth consecutive monthly increase in real GDP after the steepest monthly drops on record in March and April when widespread lockdowns were instituted to slow the spread of COVID-19.

September saw a 0.8 per cent increase in real GDP, Statistics Canada says, a slight slowing from the 0.9 per cent recorded in August.

The agency also provided a preliminary estimate for October’s figures, saying early indicators point to a 0.2 per cent increase in the month. The figure will be finalized at the end of this month.

“The fourth quarter of 2020 is still beginning with some growth, though less than we had anticipated,” CIBC senior economist Royce Mendes wrote in a note.

“Looking ahead, the economy faces a December with harsh restrictions that will likely see another contraction in economic activity.”

This report by The Canadian Press was first published Dec. 1, 2020.

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OECD sees global economy turning the corner on coronavirus crisis, led by Chinese recovery – The Globe and Mail

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An employee works on an automobile assembly line at a factory owned by Daimler in Kawasaki, Japan, on May 18, 2020.

Issei Kato/Reuters

The outlook for the global economy is improving despite a second wave of coronavirus outbreaks in many countries as vaccines emerge and a Chinese-led recovery takes hold, the OECD said on Tuesday.

The global economy will grow 4.2 per cent next year and ease to 3.7 per cent in 2022, after shrinking 4.2 per cent this year, the Organisation for Economic Cooperation and Development said in its latest Economic Outlook.

After a second wave of infections hit Europe and the United States, the Paris-based policy forum trimmed its forecasts from September, when it expected a global contraction of 4.5 per cent before a 5 per cent recovery in 2021. It did not have a 2022 forecast at the time.

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“We’re not out of the woods. We’re still in the midst of a pandemic crisis, which means that policy still has a lot to do,” said OECD chief economist Laurence Boone.

Overall global gross domestic product will return to pre-crisis levels by the end of 2021, led by a strong recovery in China, the OECD said.

But that masked wide variations among countries, with output in many economies expected to remain about 5 per cent below pre-crisis levels in 2022.

China will be the only country covered by the OECD to see any growth at all this year, at 1.8 per cent, unchanged from the last forecast in September. It will gain speed to 8 per cent in 2021 – also unchanged – before easing to 4.9 per cent in 2022.

The United States and Europe are expected to contribute less to the recovery than their weight in the global economy.

After contracting 3.7 per cent this year, the U.S. economy will grow 3.2 per cent in 2021 and 3.5 per cent in 2022, assuming a new fiscal stimulus is agreed. In September, the OECD had forecast a contraction of 3.8 per cent this year and a rebound of 4 per cent next year.

The euro area economy will contract 7.5 per cent this year, with many economies finishing the year in a double-dip recession after re-imposing lockdowns. Its economy will see growth return in 2021 at 3.6 per cent and 3.3 per cent in 2022.

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Though hard hit, the forecasts were an improvement from September, which had foreseen a contraction of 7.9 per cent this year and a 5.1 per cent rebound in 2021.

Finance Minister Chrystia Freeland says the Liberals plan a stimulus program of up to $100-billion once the COVID-19 pandemic is on the run, but until then attacking the virus and helping those who need support is their top priority. The Canadian Press

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Canada's economy bounced back at record 40% pace in third quarter — but GDP still below pre-COVID level – CBC.ca

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Statistics Canada said Tuesday the economy grew at a record annualized pace of 40.5 per cent in the third quarter as businesses came out of COVID-19 lockdowns.

The previous record for quarterly growth in real gross domestic product was 13.2 per cent in the first quarter of 1965, the agency said.

As historic as the rebound was, it fell short of expectations.

Financial data firm Refinitiv said the average economist estimate was for an annualized growth rate of 47.6 per cent for the quarter.

The rebound over July, August and September was a sharp turnaround from the preceding three-month stretch, which saw a record drop.

Driving the rebound were the further rolling back of public health restrictions that allowed businesses to reopen.

Statistics Canada also said there was a substantial increase in the housing market owing to low interest rates, as well as household spending on goods like cars.

GDP still lower than it was in February

Despite the overall increase, the national statistics office said real gross domestic product still remains shy of where it was before the pandemic.

The third quarter ended with the fifth consecutive monthly increase in real GDP after the steepest monthly drops on record in March and April when widespread lockdowns were instituted to slow the spread of COVID-19.

September saw a 0.8 per cent increase in real GDP, Statistics Canada said, a slight slowing from the 0.9 per cent recorded in August.

The agency also provided a preliminary estimate for October’s figures, saying early indicators point to a 0.2 per cent increase in the month. The figure will be finalized at the end of this month.

“The fourth quarter of 2020 is still beginning with some growth, though less than we had anticipated,” CIBC senior economist Royce Mendes wrote in a note.

“Looking ahead, the economy faces a December with harsh restrictions that will likely see another contraction in economic activity.”

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