US President Donald Trump is seeking to capitalise on a big rebound in third-quarter output as his last opportunity to turn the attention of American voters back to economic issues in the final stretch of the presidential race.
On Thursday, data from the US commerce department are expected to show the world’s largest economy grew between July and September at an annualised rate of 31 per cent, or roughly 7 per cent on a quarter-on-quarter basis, according to Reuters’ latest consensus forecast. The Atlanta Fed’s model is estimating an even steeper rise of 37 per cent.
Such figures represent a sharp rebound from the swift and damaging contraction suffered by the US economy early in the year as the coronavirus forced lockdowns and social distancing across the country. Output fell by 5 per cent in the first quarter, followed by a massive 31.4 per cent decline in the second quarter, on an annualised basis.
But even though the recovery has been faster than expected, the level of US gross domestic product in the third quarter is still unlikely to match or exceed its pre-pandemic numbers, and the labour market remains in a deep hole. In September there were still 10.7m fewer Americans employed compared with February.
Moreover, as the US experiences a new surge of the coronavirus, and Congress and the White House struggle to reach a further deal on fiscal stimulus to sustain the recovery, US growth is expected to slow sharply in the current quarter. Oxford Economics forecasts GDP will grow at 3 per cent in the fourth quarter.
Still, for Mr Trump, who is trailing his Democratic challenger Joe Biden in polls ahead of next week’s presidential election, the snapback will offer him a final opportunity to make the case that he would be a better steward of the economy.
“We’re having a Super V [shaped recovery] . . . nobody even thought. Wait till you see that number in GDP,” Mr Trump said in a rally in Pennsylvania this week. “I’ll take 25 per cent right now. I’ll take 15 right now. I think the record was like seven or eight.”
Mr Trump’s ability to describe the rebound in flattering terms has been helped by the fact that the US government reports GDP using annualised rates — the pace of change in output if it were occurring over a full year. Many other countries use quarter-on-quarter moves in GDP, which yield far smaller figures.
Mr Biden and his allies have attacked Mr Trump’s effort to tout his economic record, saying that the president’s mishandling of the pandemic created a deeper recession in the first place and has slowed progress since then.
They also describe the shape of the American economic bounceback as a “K” rather than a “V” — with wealthy households and large businesses doing well along with financial markets, while middle- and low-income families and shops suffer greatly, especially as the effects of US fiscal stimulus fade.
“[Mr Trump] inherited the longest streak of job growth in American history. But just like everything else he inherited, he screwed it up,” Barack Obama, the former US president, said while campaigning for Mr Biden in Florida this week.
“The economic damage that he inflicted by botching the pandemic response means he will be the first president since Herbert Hoover to actually lose jobs . . . that’s a long time, people,” he added.
Yet Mr Trump is determined to make as much of the rebound as he can. He took out dozens of adverts on Facebook earlier this week, boasting that third-quarter GDP growth would be “the highest in American history” and “more than double the previous record”.
The adverts were registered with Facebook in a last-minute rush ahead of a political ads blackout on the platform ahead of the November 3 election.
Facebook refuses to fact-check political advertising. However the company announced last month that it would block new political advertisements in the week leading up to the US election. Existing political adverts, however, are not blocked.
Mr Trump’s campaign appeared to have registered the adverts in Facebook’s public library, as per protocol, but only showed them initially to a handful of users — suggesting they plan to boost their promotion at a later date.
Additional reporting by Demetri Sevastopulo
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