The United States’ Real Gross Domestic Product (GDP) expanded at an annual rate of 33.1% in the third quarter, the US Bureau of Economic Analysis’ advance estimate showed on Thursday. Despite the leap, there is no V-shaped recovery as investors are worried about the impact of coronavirus in the fourth quarter, FXStreet’s Analyst Yohay Elam briefs.
With the initial market reaction, the US Dollar Index edged slightly lower from the 13-day high it set at 93.80. As of writing, the index was up 0.31% on the day at 93.72. Meanwhile, the EUR/USD pair recovered modestly in the last minutes and is currently losing 0.3% at 1.1709.
“The best quarter in history – following the worst one. GDP jumped by an annualized rate of 33.1%, above expectations. That included a surge of 40.7% in personal consumption, a core component of the economy. Business spending is up over 23% after crashing 27%.”
“In quarterly terms, the world’s largest economy fell by -10.1% in the first half of the year and now rose by 7.4%. That means that there is still some 3% to reach pre-pandemic levels – and more to reach the levels of activity had the economy continued growing at its moderate 2-2.5% pace.”
“Markets have moved on from the three months that ended in September to October and the colder months ahead. European countries are entering new forms of lockdowns as COVID-19 cases rage and figures are rising also in the US. Worries about a second American wave are already hurting markets and they may continue. Things are moving fast in the coronavirus era, making even the quickly-released first release of GDP a lagging indicator.”
“The data is released just five days ahead of the all-important US elections. President Donald Trump will likely tout the outstanding figure, despite the fact that it only represents a rebound from a crash – and not a V-shaped recovery. Will it impact voters? Around 75 million Americans – 55.5% of the total vote count in 2016, so there is less room for impact.”